[House Report 106-168]
[From the U.S. Government Publishing Office]



106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    106-168

======================================================================



 
                  REGULATORY RIGHT-TO-KNOW ACT OF 1999

                                _______
                                

  June 7, 1999.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


    Mr. Burton of Indiana, from the Committee on Government Reform, 
                        submitted the following

                              R E P O R T

                             together with

                     MINORITY AND ADDITIONAL VIEWS

                        [To accompany H.R. 1074]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Government Reform, to whom was referred 
the bill (H.R. 1074) to provide Governmentwide accounting of 
regulatory costs and benefits, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Purpose..........................................................4
 II. Need for Legislation.............................................5
III. Committee Action.................................................9
 IV. Section-by-Section Analysis......................................9
  V. Oversight Findings..............................................12
 VI. Budget Analysis and Projections.................................12
VII. Congressional Budget Office Estimate............................12
VIII.Constitutional Authority Statement..............................13

 IX. Changes in Existing Law Made by the Bill, as reported...........13
  X. Committee Recommendations.......................................13
 XI. Congressional Accountability Act; Public Law 104-1..............13
XII. Unfunded Mandates Reform Act; Public Law 104-4, Section 425.....14
XIII.Federal Advisory Committee Act (5 U.S.C. App.) Sec. 5B..........14

Minority Views...................................................    15
Additional Views.................................................    24

  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 Right-to-Know Act of 
1999''.

SEC. 2. PURPOSES.

  The purposes of this Act are to--
          (1) promote the public right-to-know about the costs and 
        benefits of Federal regulatory programs and rules;
          (2) increase Government accountability; and
          (3) improve the quality of Federal regulatory programs and 
        rules.

SEC. 3. DEFINITIONS.

  In this Act:
          (1) In general.--Except as otherwise provided in this 
        section, the definitions under section 551 of title 5, United 
        States Code, shall apply to this Act.
          (2) Benefit.--The term ``benefit'' means the reasonably 
        identifiable significant favorable effects, quantifiable and 
        nonquantifiable, including social, health, safety, 
        environmental, and economic effects, that are expected to 
        result from implementation of, or compliance with, a rule.
          (3) Cost.--The term ``cost'' means the reasonably 
        identifiable significant adverse effects, quantifiable and 
        nonquantifiable, including social, health, safety, 
        environmental, and economic effects, that are expected to 
        result from implementation of, or compliance with, a rule.
          (4) Director.--The term ``Director'' means the Director of 
        the Office of Management and Budget.
          (5) Major rule.--The term ``major rule'' has the meaning that 
        term has under section 804(2) of title 5, United States Code.
          (6) Nonmajor rule.--The term ``nonmajor rule'' means any 
        rule, as that term is defined in section 804(3) of title 5, 
        United States Code, other than a major rule.
          (7) Paperwork.--The term ``paperwork'' has the meaning given 
        the term ``collection of information'' under section 3502 of 
        title 44, United States Code.
          (8) Program component.--The term ``program component'' means 
        a set of related rules.

SEC. 4. ACCOUNTING STATEMENT.

  (a) In General.--Not later than February 5, 2001, and on the first 
Monday in February of each year thereafter, the President, acting 
through the Director of the Office of Management and Budget, shall 
prepare and submit to the Congress an accounting statement and 
associated report containing an estimate of the total annual costs and 
benefits of Federal regulatory programs, including rules and 
paperwork--
          (1) in the aggregate;
          (2) by agency, agency program, and program component; and
          (3) by major rule.
  (b) Additional Information.--In addition to the information required 
under subsection (a), the President shall include in each accounting 
statement under subsection (a) the following information:
          (1) An analysis of impacts of Federal rules and paperwork on 
        Federal, State, local, and tribal government, the private 
        sector, small business, wages, consumer prices, and economic 
        growth, as well as on public health, public safety, the 
        environment, consumer protection, equal opportunity, and other 
        public policy goals.
          (2) An identification and analysis of overlaps, duplications, 
        and potential inconsistencies among Federal regulatory 
        programs.
          (3) Recommendations to reform inefficient or ineffective 
        regulatory programs or program components, including 
        recommendations for addressing market failures that are not 
        adequately addressed by existing regulatory programs or program 
        components.
  (c) Net Benefits and Costs.--To the extent feasible, the Director 
shall, in estimates contained in any submission under subsection (a), 
quantify the net benefits or net costs of--
          (1) each program component covered by the submission;
          (2) each major rule covered by the submission; and
          (3) each option for which costs and benefits were included in 
        any regulatory impact analysis issued for any major rule 
        covered by the submission.
  (d) Summary of Regulatory Activity.--The Director shall include in 
each submission under subsection (a) a table stating the number of 
major rules and the number of nonmajor rules issued by each agency in 
the preceding fiscal year.
  (e) Years Covered by Accounting Statement.--Each accounting statement 
submitted under this section shall, at a minimum--
          (1) cover expected costs and benefits for the fiscal year for 
        which the statement is submitted and each of the 4 fiscal years 
        following that fiscal year;
          (2) cover previously expected costs and benefits for each of 
        the 2 fiscal years preceding the fiscal year for which the 
        statement is submitted, or the most recent revision of such 
        costs and benefits; and
          (3) with respect to each major rule, include the estimates of 
        costs and benefits for each of the fiscal years referred to in 
        paragraphs (1) and (2) that were included in the regulatory 
        impact analysis that was prepared for the major rule.
  (f) Delayed Application of Certain Requirements.--
          (1) Application after first statement.--The following 
        requirements shall not apply to the first accounting statement 
        submitted under this section:
                  (A) The requirement under subsection (a)(2) to 
                include estimates with respect to program components.
                  (B) The requirement under subsection (b)(2).
          (2) Application after second statement.--The requirement 
        under subsection (b)(1) to include analyses of impacts on 
        wages, consumer prices, and economic growth shall not apply to 
        the first and second accounting statements submitted under this 
        section.

SEC. 5. NOTICE AND COMMENT.

  (a) In General.--Before submitting an accounting statement and the 
associated report to Congress under section 4, and before preparing 
final guidelines under section 6, the Director of the Office of 
Management and Budget shall--
          (1) provide public notice and an opportunity of at least 60 
        days for submission of comments on the statement and report or 
        guidelines, respectively; and
          (2) consult with the Director of the Congressional Budget 
        Office on the statement and report or guidelines, respectively.
  (b) Appendix.--After consideration of the comments, the Director 
shall include an appendix to the report or guidelines, respectively, 
addressing the public comments and peer review comments under section 
7.
  (c) Availability of Peer Review Comments.--To ensure openness, the 
Director shall make all final peer review comments available in their 
entirety to the public.

SEC. 6. GUIDELINES FROM THE OFFICE OF MANAGEMENT AND BUDGET.

  (a) In General.--Not later than 270 days after the date of enactment 
of this Act, the Director of the Office of Management and Budget, in 
consultation with the Council of Economic Advisers, shall issue 
guidelines to agencies to standardize--
          (1) most plausible measures of costs and benefits;
          (2) the means of gathering information used to prepare 
        accounting statements under this Act, including information 
        required for impact analyses required under section 4(b)(1); 
        and
          (3) the format of information provided for accounting 
        statements, including summary tables.
  (b) Review.--The Director shall review submissions from the agencies 
to ensure consistency with the guidelines under this section.

SEC. 7. PEER REVIEW.

  (a) In General.--The Director of the Office of Management and Budget 
shall arrange for 2 or more persons that have nationally recognized 
expertise in regulatory analysis and regulatory accounting and that are 
independent of and external to the Government, to provide peer review 
of each accounting statement and associated report under section 4 and 
the guidelines under section 6 before the statement, report, or 
guidelines are final.
  (b) Written Comments.--The peer review under this section shall 
provide written comments to the Director in a timely manner. The 
Director shall use the peer review comments in preparing the final 
statements, associated reports, and guidelines.
  (c) FACA.--Peer review under this section shall not be subject to the 
Federal Advisory Committee Act (5 U.S.C. App.).
  (d) Balance and Independence.--The Director shall ensure that--
          (1) the persons that provide peer review under subsection (a) 
        are fairly balanced with respect to the points of view 
        represented;
          (2) no person that provides peer review under subsection (a) 
        has a conflict of interest that is relevant to the functions to 
        be performed in the review; and
          (3) the comments provided by those persons--
                  (A) are not inappropriately influenced by any special 
                interest; and
                  (B) are the result of independent judgment.

                               I. PURPOSE

    The purposes of the ``Regulatory Right-to-Know Act of 
1999'' are to promote the public right-to-know about the costs 
and benefits of Federal regulatory programs and rules, to 
increase Government accountability, and to improve the quality 
of Federal regulatory programs and rules. The bill requires the 
Office of Management and Budget (OMB) to prepare an annual 
accounting statement and an associated report. The accounting 
statement would provide estimates of the costs and benefits of 
Federal regulatory programs in the aggregate, by agency, by 
agency program, and by major rule. The associated report would 
analyze the impacts of Federal rules and paperwork on various 
sectors and functional areas. Currently, there is no report 
that analyzes the cumulative impacts of Federal regulations. 
Americans have a right to know the cumulative costs, benefits, 
and impacts of Federal regulations.

                                SUMMARY

    In brief, the Regulatory Right-to-Know Act of 1999 is 
intended to do the following:
    A. Require that OMB annually submit to the Congress, 
simultaneously with the Budget of the United States Government, 
an accounting statement and associated report on the annual 
costs and benefits of Federal regulatory programs.
    Section 4(a) requires OMB to identify regulatory costs and 
benefits: (1) in the aggregate; (2) by agency, agency program, 
and program component; and (3) by major rule. Section 4(c) 
requires OMB to identify the net benefits or net costs for: (1) 
each program component, (2) each major rule, and (3) each 
regulatory option for which costs and benefits were included in 
any regulatory impact analysis. Section 4(e) requires that each 
accounting statement cover the current fiscal year, the two 
preceding fiscal years, and the four following fiscal years. 
This is the identical time series used in the Budget of the 
United States Government.
    Section 4(b) requires that the associated report include 
three parts. First, OMB shall provide an analysis of the 
impacts of Federal rules and paperwork on State and local 
government, the private sector, small business, wages, consumer 
prices, economic growth, public health, public safety, the 
environment, consumer protection, equal opportunity, and other 
public policy goals. Second, OMB shall identify and analyze 
overlaps, duplications, and potential inconsistencies among 
Federal regulatory programs. Finally, OMB shall provide 
recommendations to reform inefficient or ineffective regulatory 
programs or program components, including recommendations for 
addressing market failures. Section 4(f) provides that the 
various analyses are phased in over a three-year period.
    B. Require that OMB provide a summary table including the 
number of major rules and the number of nonmajor rules issued 
by each agency in the preceding fiscal year.
    C. Require that OMB, before finalizing the accounting 
statement, associated report, and OMB guidelines, provide the 
public with notice and an opportunity to comment, and peer 
review by two or more experts. Section 5 requires OMB to 
consult with the Congressional Budget Office (CBO) on the 
accounting statement, associated report, and OMB guidelines. 
Section 5 also requires OMB, after consideration of the public 
and peer review comments, to incorporate an appendix to the 
report addressing the public and peer review comments. To 
ensure openness, Section 5 also provides that OMB will make all 
final peer review comments available in their entirety to the 
public.
    Section 7 requires OMB to arrange for external peer review 
by individuals or organizations with nationally recognized 
expertise in regulatory analysis and regulatory accounting. 
Section 7 also requires that these persons are independent of 
and external to the Government. Further, Section 7 requires 
that the peer reviewers are fairly balanced with respect to the 
points of view represented, that the peer reviewers have no 
conflict of interest, and that the comments provided are not 
inappropriately influenced by any special interest and are the 
result of independent judgment.
    D. Require that OMB, after consultation with the Council of 
Economic Advisors, issue guidelines to the agencies to 
standardize most plausible measures of costs and benefits, the 
means of gathering information used to prepare the accounting 
statements and impact analyses, and the format of the 
accounting statements and summary tables. Section 6 requires 
that OMB review submissions from the agencies to ensure 
consistency with OMB's guidelines.

                        II. NEED FOR LEGISLATION

    Over the past four years, Congress has changed the 
direction of the Federal Government from the endless burden of 
more taxes and spending to the new fiscal discipline of balance 
and accountability. America's freedom and innovation have 
resulted in a quality and productivity revolution and an 
American economy that is the unparalleled envy of the world. 
American business has brought incredible improvements to our 
quality of life, health care, and education. Through the new 
emphasis on flexibility and innovation, State and local 
governments have led the way to safer, cleaner, and better 
places to live. Congress must understand the impact of Federal 
regulatory programs on our economy and innovation. In addition 
to taxes, the Federal Government imposes tremendous costs and 
restrictions on innovation in the private sector, State and 
local governments, and the public through ever increasing 
Federal regulations. Here, too, we must strive for quality, 
efficiency, and accountability.
    The burden of Federal regulations on the American public 
continues to grow. Professor Thomas D. Hopkins, Interim Dean, 
College of Business at the Rochester Institute of Technology, 
estimated total regulatory costs for 1999 to be over $700 
billion.1 In his March 24, 1999 testimony at the 
Subcommittee on National Economic Growth, Natural Resources, 
and Regulatory Affairs' hearing on H.R. 1074, Dr. Hopkins 
stated, ``Expressed differently, the hidden burden of 
regulation will be roughly half as large as the Federal 
Government's entire tax receipts for the year. If an 
`informational invoice' were mailed to each American family for 
its share of spending on regulatory compliance, the average 
family would `owe' some $7,000 annually, over and above all 
taxes.'' Families spend more on regulation than on medical 
expenses, food, transportation, recreation, clothing, and 
savings. In an annual report on the Federal regulatory state, 
Clyde Wayne Crews, Director of Competition and Regulation 
Policy at the Competitive Enterprise Institute, another witness 
at the Subcommittee's March 24th hearing, reported that 
``regulatory costs happen to equal 1996 individual income 
taxes, which were also $737 billion . . . Corporate taxes at 
$182 billion, are greatly outdistanced by regulatory costs. 
Even pretax corporate profits, $640 billion in 1996, are 
exceeded by regulatory costs.'' 2
---------------------------------------------------------------------------
    \1\ Thomas D. Hopkins article published in the December 1998 
journal Policy Sciences.
    \2\ P. 7, Clyde Wayne Crews, Jr., ``Ten Thousand Commandments: An 
Annual Policymaker's Snapshot of the Federal Regulatory State,'' March 
1999 Edition.
---------------------------------------------------------------------------
    In his March 24th testimony before the House Government 
Reform Committee's Subcommittee, Commerce Committee Chairman 
Thomas J. Bliley, Jr. stated, ``By any measure, the task of 
responsibly managing Federal regulatory programs is large. The 
current Federal regulatory system encompasses more than 50 
Federal agencies and more than 126,000 workers. Between April 
1, 1996 and April 30, 1998 Congress received 8,675 new final 
rules for review. In 1997 alone the Federal Register had 
published 64,549 pages. In 1996, the Code of Federal 
Regulations filled 204 volumes and occupied 19 feet of shelf 
space.''
    H.R. 1074 builds on provisions in the 1997, 1998, and 1999 
Treasury and General Government Appropriations Acts authored by 
Senators Stevens and Thompson, each of which called for OMB to 
submit a report that provides estimates of the costs and 
benefits of Federal regulations. H.R. 1074 establishes a 
permanent requirement for OMB to annually prepare this 
important information. Dr. Hopkins testified, ``H.R. 1074 would 
establish the important principle that a report of this nature, 
with improvements, should be a regular part of the annual cycle 
of government reporting, rather than an ad hoc intermittent 
exercise.''
    The bill will not impose an undue burden on OMB. In fact, 
CBO estimated that H.R. 1074 ``would increase Federal reporting 
costs by less than $500,000 a year.'' Much of the needed 
information is already available. Since President Reagan's 1981 
historic executive order, Federal agencies have been required 
to perform cost-benefit analyses of major rules, which 
constitute the bulk of Federal regulatory costs and benefits. 
Also, OMB can use many other sources of information, including 
private regulatory accounting studies and government studies.
    With respect to the provisions in the bill, Dr. Hopkins 
testified, ``The bill's definitions of benefit and cost in 
Section 3 are sound and exactly what the accounting statement 
of Section 4(a)(1) should be based upon.'' California State 
Senator Jim Costa, representing the National Conference of 
State Legislatures (NCSL), testified at the Subcommittee's 
March 24th hearing in support of the bill and its requirement 
for an impact analysis on State and local governments. He 
stated:

          To understand the potential benefit of such a report, 
        it should be compared with the procedures and annual 
        reports now provided by the Congressional Budget Office 
        pursuant to the Unfunded Mandates Reform Act (UMRA).
          UMRA provides a sound procedural mechanism for 
        assessing the potential fiscal impact of unfunded 
        Federal mandates on state and local governments. This 
        process has proven quite successful in limiting costly 
        unfunded mandates on state and local governments. In 
        short, when Congress is well informed about mandates, 
        fewer mandates are imposed and costs to states and 
        localities are limited. . . .
          A similar reporting mechanism, such as that 
        contemplated in H.R. 1074, is needed to prevent, or at 
        least to account for, similar mandates imposed through 
        the regulatory process. . . . An annual report will go 
        a long way to identifying the true fiscal impacts on 
        state and local governments of promulgated rules, the 
        vast majority of which do not have the same visibility 
        as legislation. This report would give Congress an 
        important tool in its oversight function to help ensure 
        that agencies have not exceeded their statutory 
        authority. The report could also assist with 
        identification of unintended or undesirable 
        consequences of current statutory language. . . . They 
        also would give Congress better information on the 
        cumulative costs to states and localities of regulatory 
        actions.

    At the Subcommittee's March 24th hearing, Angela Antonelli, 
Director of the Thomas A. Roe Institute for Economic Studies at 
The Heritage Foundation, testified, ``The health of our 
nation's economy, and, even more importantly, a desire to 
achieve the highest levels of investments in public health, 
safety and environmental protections demands that Congress 
empower itself and the public with the information and analysis 
about the benefits andconsequences of Federal regulations . . . 
Until Congress and the public demand more information and 
accountability from regulators in order to engage them in a debate 
about regulatory priorities and spending in the same way we do about 
the annual federal budget, not much change can or should be expected.''
    With respect to the requirement for OMB to identify and 
analyze overlaps, duplications, and potential inconsistencies 
among Federal regulatory programs, State Senator Costa 
testified, ``duplications and overlaps will continue to plague 
us unless, as provided in H.R. 1704, OMB . . . seeks to 
identify and resolve these duplications.''
    With respect to the requirement for OMB to issue guidelines 
to the agencies to standardize most plausible measures of costs 
and benefits, the means of gathering information used to 
prepare the accounting statements and impact analyses, and the 
format of the accounting statements and summary tables, on 
March 24th, Ms. Antonelli testified, ``There is no reason why 
agencies cannot follow one set of guidelines. The continuing 
inconsistency in benefit-cost methods reflects the fact that 
neither the President nor Congress has demanded any better from 
the agencies.'' Dr. Hopkins testified, ``In my view, the single 
most valuable contribution of H.R. 1074 appears in Section 
6(a), which calls for standardization of the cost and benefit 
data that agencies would be required to provide. The value of 
this requirement is further enhanced by its applicability to 
all Federal regulatory agencies and to paperwork.''
    With respect to the requirement for public comment, State 
Senator Costa testified, ``let me voice NCSL's support of the 
critical notice and comment requirement in Section 5. . . . In 
this way, more accurate information can be developed and a 
dialogue opened on the costs and benefits of regulatory 
actions.'' With respect to the requirement for peer review, Ms. 
Antonelli testified that ``Because regulators are self-
interested, independent review is essential. . . . it is 
necessary to ensure that any OMB report be subject to outside, 
independent review.''
    The Committee has received letters of support for H.R. 1074 
from more than 20 organizations, including the seven major 
bipartisan organizations representing State and local elected 
officials. These are the National Governors' Association, 
National Conference of State Legislatures, Council of State 
Governments, U.S. Conference of Mayors, National League of 
Cities, National Association of Counties, and International 
City/County Management Association. Other organizations 
endorsing the bill include: Alliance USA, American Farm Bureau 
Federation, Americans for Tax Reform, Associated Builders and 
Contractors, the Business Roundtable, Center for the Study of 
American Business, Chamber of Commerce of the USA, Chemical 
Manufacturers Association, Citizens for a Sound Economy, 
National Association of Manufacturers, National Federation of 
Independent Business, the Seniors Coalition, the 60 Plus 
Association, and Small Business Survival Committee.
    An example of a comment submitted is from Dean Kleckner, 
President of the American Farm Bureau Federation: ``[H.R. 1074] 
will require that Federal agencies, must, at least annually, 
review the costs and benefits of their regulatory and other 
activities. This kind of self-assessment is long overdue and is 
a healthy exercise. It is the kind of self-assessment farmers 
must undertake regularly to remain economically viable in a 
rapidly changing international economy.''
    OMB itself has recognized the value of presenting 
information to the public on the costs and benefits of Federal 
regulations. In its February 1999 report to Congress on the 
costs and benefits of Federal regulations, OMB stated that, 
``The 1997 report was our effort to begin an incremental 
process which we believe will lead to improved information on 
the effects of regulations.'' 3 At the 
Subcommittee's March 24th hearing, Chairman Bliley testified 
that OMB understands the value of this exercise since, in its 
February 1999 report, OMB stated: ``We hope to continue this 
important dialogue to improve our knowledge about the effects 
of regulation on the public, the economy, and American 
society.'' 4
---------------------------------------------------------------------------
    \3\ P. 1, ``Report to Congress on the Costs and Benefits of Federal 
Regulations: 1998'', Office of Management and Budget.
    \4\ P. 2, Ibid.
---------------------------------------------------------------------------
    The ``Regulatory Right-to-Know Act of 1999'' is a basic 
step toward a smarter partnership in regulatory programs. It is 
an important tool to understand the magnitude and impact of 
Federal regulatory programs. The Act will empower all 
Americans, including State and local government officials, with 
new information and opportunities to help them participate more 
fully and improve our government. More useful information and 
public input will help regulators make better, more accountable 
decisions and promote greater confidence in the quality of 
Federal policy and regulatory decisions. Better decisions and 
improved regulatory programs will enhance innovation, improve 
the quality of the environment, secure our economic future, and 
foster a better quality of life for every American.

                         III. COMMITTEE ACTION

    The bipartisan ``Regulatory Right-to-Know Act of 1999'' 
(H.R. 1074) was introduced on March 11, 1999, by Commerce 
Committee Chairman Tom Bliley, National Economic Growth, 
Natural Resources, and Regulatory Affairs Subcommittee Chairman 
David McIntosh, and Representatives Gary Condit and Charles 
Stenholm. There were 27 other original co-sponsors, including 
15 other Democrats and 12 other Republicans.
    After introduction, the bill was referred to the Committee 
on Government Reform. On March 24, 1999, the Subcommittee on 
National Economic Growth, Natural Resources and Regulatory 
Affairs held a hearing on H.R. 1074. On April 20, 1999, the 
Subcommittee held a mark up of the bill. Chairman McIntosh 
introduced a substitute as base text. In addition, the 
Subcommittee accepted an amendment by Ranking Member Dennis 
Kucinich to add impact analyses by functional areas and to 
include recommendations addressing market failures. Mr. 
Kucinich withdrew a second amendment and the Subcommittee, by 
voice vote, did not accept a third amendment offered by Mr. 
Kucinich.
    On May 19, 1999, the Government Reform Committee held a 
mark up of the bill. TheCommittee, by voice vote, accepted an 
amendment offered by Subcommittee Chairman McIntosh, with Mr. 
Kucinich's support, on peer review to ensure openness, balance, and 
independence. Ranking Member Henry Waxman withdrew a second amendment 
and the Committee, by voice vote, did not accept a third amendment 
offered by Mr. Kucinich. By voice vote, the Committee approved 
reporting H.R. 1074, as amended, to the full House.

                    IV. SECTION-BY-SECTION ANALYSIS

Section 1. Title

Section 2. Purposes

    The purposes of the bill are to promote the public's right-
to-know the benefits and costs of regulatory programs, to 
increase government accountability, and to improve the quality 
of regulatory programs.

Section 3. Definitions

    Section 3 includes definitions for ``benefit,'' ``cost,'' 
``major rule,'' ``nonmajor rule,'' ``paperwork,'' and ``program 
component.'' The terms ``benefit'' and ``cost'' include non- 
quantifiable and quantifiable social, health, safety, 
environmental, and economic effects that are expected to result 
from implementation of, or compliance with, a rule.

Section 4. Accounting statement

    Section 4 requires OMB to annually submit to the Congress, 
simultaneously with the Budget of the United States Government, 
an accounting statement and associated report on the annual 
costs and benefits of Federal regulatory programs. Section 4(a) 
requires that the accounting statement identify regulatory 
costs and benefits: (1) in the aggregate; (2) by agency, agency 
program, and program component; and (3) by major rule. For 
program components, the bill provides OMB discretion in 
identifying groups of rules and paperwork and their 
relationships. Initially, there may be broad groupings. After 
successive comment periods and reports, the Committee expects 
that the program components identified by OMB will become more 
refined.
    Section 4(b) requires that the associated report include 
three parts. First, OMB shall provide an analysis of the 
impacts of Federal rules on State and local government, the 
private sector, small business, wages, consumer prices, 
economic growth, public health, public safety, the environment, 
consumer protection, equal opportunity, and other public policy 
goals. Second, OMB shall identify and analyze overlaps, 
duplications, and potential inconsistencies among Federal 
regulatory programs. Third, OMB shall provide recommendations 
to reform inefficient or ineffective regulatory programs or 
program components, including recommendations for addressing 
market failures.
    The impact analyses do not need to be done separately for 
each rule or program component. The bill provides OMB 
discretion in aggregating or dividing impact analyses either 
across or among regulatory programs. The bill does not limit 
OMB from performing more detailed or additional analyses. For 
example, OMB could analyze impacts on sectors in the regulated 
community. OMB should address information on impacts provided 
by public and peer review comments. Lastly, where possible, the 
Committee expects OMB to provide quantifiable information.
    For the identification of overlaps, duplications, and 
potential inconsistencies, OMB should, at a minimum, review the 
objectives of Federal programs and program components and their 
relationships. For example, where two or more agencies perform 
related sets of activities, OMB should examine the relationship 
of these programs. OMB should address public and peer review 
comments on overlaps, duplications, and potential 
inconsistencies.
    The provision requiring OMB to provide recommendations to 
reform inefficient or ineffective regulatory programs or 
program components relates to existing programs and program 
components. There are a number of sources of information on 
which OMB could base such recommendations. First, the 
accounting statement may reveal marginally productive or 
counterproductive rules or program components. Second, the 
analyses of overlaps, duplications, and potential 
inconsistencies may reveal areas for consolidation. Third, OMB 
should address recommendations offered by the public and peer 
reviewers. Fourth, existing executive branch efforts for 
legislative or regulatory amendments to reform existing 
programs and program components should be included. Fifth, 
existing or new State, local, private sector, or voluntary 
programs may reveal more efficient or more effective means to 
achieve a desired objective.
    For the recommendations for addressing market failures that 
are not adequately addressed by existing regulatory programs or 
program components, OMB shall consider the full range of 
existing non-Federal and non-regulatory strategies before 
concluding there is a market failure. Other strategies include 
existing Federal, State, and local laws and rules. For any 
identified market failure, OMB shall explain how the failure of 
these strategies resulted in a market failure. This provision 
is not an invitation for recommendations for Federal action in 
traditional State and local areas of responsibility.
    Section 4(c) requires OMB to identify the net benefits or 
net costs for: (1) each program component, (2) each major rule, 
and (3) each regulatory option for which costs and benefits 
were included in any regulatory impact analysis.
    Section 4(d) requires OMB to provide a summary table 
including the number of major rules and the number of nonmajor 
rules issued by each agency in the preceding fiscal year.
    Section 4(e) requires that each accounting statement cover 
the current fiscal year, the two preceding fiscal years, and 
the four following fiscal years. This is the identical time 
series used in the Budget of the United States Government.
    Section 4(f) provides that the various analyses are phased 
in over a three-year period. The Committee expects that OMB 
will begin to solicit comments in the first year on how 
toaddress those analyses that are not required until the second or 
third years.

Section 5. Notice and comment

    Section 5 requires that OMB, before finalizing the 
accounting statement, associated report, and OMB guidelines, 
provide the public with notice and an opportunity to comment, 
and peer review by two or more experts. This section also 
requires OMB to consult with CBO before finalizing any of the 
three documents. Further, this section requires OMB, after 
consideration of the public and peer review comments, to 
incorporate an appendix to the report addressing the public and 
peer review comments. To ensure openness, Section 5 also 
provides that OMB will make all final peer review comments 
available in their entirety to the public.

Section 6. OMB guidelines

    Section 6 requires OMB, after consultation with the Council 
of Economic Advisors, to issue guidelines to the agencies to 
standardize most plausible measures of costs and benefits, the 
means of gathering information used to prepare the accounting 
statements and impact analyses, and the format of the 
accounting statements and summary tables. Section 6 also 
requires that OMB review submissions from the agencies to 
ensure consistency with OMB's guidelines. This provision does 
not require or suggest that OMB revise its existing best 
practices guidelines. However, OMB needs to provide more 
specific guidelines to ensure the use of the most plausible 
measures in future reports. The goal is to provide 
scientifically and economically objective estimates which 
neither minimize nor exaggerate costs or benefits and which use 
the best available scientific and economic information. Current 
discrepancies in agency estimation procedures have hindered 
program comparisons and determinations about incremental costs 
and benefits.

Section 7. Peer review

    OMB shall arrange for two or more experts to provide peer 
review of: (1) the OMB guidelines, and (2) each accounting 
statement and associated report. The peer reviewers shall 
provide written comments to OMB. Section 7 requires that the 
individuals or organizations chosen as peer reviewers have 
nationally recognized expertise in regulatory analysis and 
regulatory accounting. This section also requires that these 
persons are independent of and external to the Government. 
Further, Section 7 requires that the peer reviewers are fairly 
balanced with respect to the points of view represented, that 
the peer reviewers have no conflict of interest, and that the 
comments provided are not inappropriately influenced by any 
special interest and are the result of independent judgment. 
The Committee does not envision that the required peer review 
is a committee function; therefore, the bill does not require 
establishment of an advisory committee subject to the Federal 
Advisory Committee Act. Instead, the Committee expects that the 
peer reviewers, based on their special expertise and 
qualifications in regulatory analysis and regulatory 
accounting, will provide their individual views.

                         v. oversight findings

    Pursuant to Rule XIII, clause 3(c)(1), of the Rules of the 
House of Representatives, the results and findings for these 
oversight activities are incorporated in the recommendations 
found in this bill and in this report.

                  vi. budget analysis and projections

    H.R. 1074 provides for no new authorization, budget 
authority or tax expenditures. Consequently, the provisions of 
section 308(a)(1) of the Congressional Budget Act of 1974 are 
not applicable.

             vii. congressional budget office cost estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 25, 1999.
Hon. Dan Burton,
Chairman, Committee on Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1074, the 
Regulatory Right-to-Know Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is John R. 
Righter.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 1074--Regulatory Right-to-Know Act of 1999

    H.R. 1074 would require the Office of Management and Budget 
(OMB) to submit annually to the Congress an accounting 
statement of the costs and benefits of federal regulations. 
Prior to its submission, the bill would require that OMB make 
the statement available for public comment and have it reviewed 
by two or more experts in regulatory analysis. H.R. 1074 also 
would require that OMB issue guidelines to agencies for 
implementing the bill's provisions.
    The Congress has required OMB to submit a regulatory 
accounting statement in each of the past three years, most 
recently as part of the Omnibus Consolidated and Emergency 
Supplemental Appropriations Act for Fiscal Year 1999 (Public 
Law 105-277). CBO assumes that the statements submitted under 
H.R. 1074 would be similar to those previously submitted by 
OMB, which have relied on existing information, such as 
agencies' analyses of new rules, to estimate the aggregate 
costs and benefits of federal regulations. In addition, Public 
Law 105-277 already requires that OMB issue guidelines to 
agencies for implementing a cost-benefit accounting statement. 
Thus, CBO estimates that implementing H.R. 1074 would increase 
federal reporting costs by less than $500,000 a year, assuming 
appropriation of the necessary amounts. Because the bill would 
not affect direct spending or receipts, pay-as-you-go 
procedures would not apply.
    H.R. 1074 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on the budgets of state, local, or tribal 
governments.
    The CBO staff contact is John R. Righter. This estimate was 
approved by Paul N. Van de Water, Assistant Director for Budget 
Analysis.

                VIII. CONSTITUTIONAL AUTHORITY STATEMENT

    Clauses 14 and 18 of Article I, Section 8 of the 
Constitution grants the Congress the power to enact this law.

       IX. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    H.R. 1074 does not make any changes in existing law.

                      X. COMMITTEE RECOMMENDATIONS

    On May 19, 1999, a quorum being present, the Committee on 
Government Reform ordered the bill favorably reported, as 
amended, by voice vote.

         XI. CONGRESSIONAL ACCOUNTABILITY ACT; PUBLIC LAW 104-1

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(B)(3) of the Congressional Accountability Act (P.L. 104-1).

    XII. UNFUNDED MANDATES REFORM ACT; PUBLIC LAW 104-4, SECTION 425

    The Committee finds that the legislation does not impose 
any Federal Mandates within the meaning of Section 423 of the 
Unfunded Mandates Reform Act (P.L. 104-4).

   XIII. FEDERAL ADVISORY COMMITTEE ACT (5 U.S.C. APP.) SECTION 5(B)

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., Section 5(b). In fact, Section 
7(c) of H.R. 1074 provides that the peer review under the bill 
is not subject to the Federal Advisory Committee Act.

                             Minority Views

    H.R. 1074 is a controversial bill requiring extensive 
accounting of the annual costs and benefits of regulations. It 
appears to require significantly more analysis than has been 
required pursuant to various appropriations riders. H.R. 1074 
would require, for the first time, cost/benefit analyses for 
each agency, program, and program component, and extensive new 
impact analyses. Further, because there are so many data gaps 
and methodological problems, the Administration warns that 
``[a]ggregate estimates of the costs and benefits of regulation 
offer little guidance on how to improve the efficiency, 
effectiveness, or soundness of the existing body of 
regulations.'' 1
---------------------------------------------------------------------------
    \1\ Office of Management and Budget, Office of Information and 
Regulatory Affairs, Report to Congress on the Costs and Benefits of 
Federal Regulations, 5 (1998).
---------------------------------------------------------------------------
    We join the Administration and numerous labor, public 
health, environmental, and consumer groups in opposing H.R. 
1074.2
---------------------------------------------------------------------------
    \2\ Over 60 groups opposing H.R. 1074 signed onto a May 18, 1999, 
letter from Citizens for Sensible Safeguards to the U.S. House of 
Representatives (attached).
---------------------------------------------------------------------------

                      I. Concerns About H.R. 1074

                a. h.r. 1074 would require new analyses

    Proponents of the bill often state that H.R. 1074 merely 
codifies language that was included in previous appropriations 
bills. This is simply not true. Appropriations language did not 
require OMB or agencies to conduct any new analyses. It merely 
required OMB to compile (1) cost/benefit and impact analyses 
that were already conducted by the agencies, such as the 
analyses of major rules required by Executive Order 12866, and 
(2) regulatory analyses that were conducted by outside 
entities.3
---------------------------------------------------------------------------
    \3\ When the language was first adopted in 1996, Senator Levin 
stated, ``The amendment does not, and this is why I am able to support 
it, does not require OMB to conduct new studies or analyses or develop 
new data or information. That would be a time-consuming, and expensive 
use of taxpayer money. Better that OMB staff use its time and money to 
help make sure new regulations follow the dictates of common sense and 
be cost-effective regulations. No, this amendment simply directs OMB to 
put together the already available information that it has on existing 
Federal regulatory programs and use that to estimate the total annual 
costs and benefits of each.'' When similar language was adopted a year 
later, Senator Thompson stated, ``OMB is not mandated to devote vast 
resources to create such models. Instead, OMB may use available 
reports, studies, and other relevant information to assess the direct 
and indirect impacts of Federal rules.''
---------------------------------------------------------------------------
    H.R. 1074, on the other hand, would also require the 
agencies or OMB to conduct:
        cost/benefit analyses for each agency,
        cost/benefit analyses for each program,
        cost/benefit analyses for each program component,
        analyses that cover costs and benefits for the two 
        previous years and the following four years,
        net benefits and cost calculations for each program,
        net benefits and cost calculations for each major rule,
        net benefits and cost calculations for each option 
        discussed in any regulatory impact analysis (RIA) for 
        any major rule, and
        a number of new impact statements, including the impact 
        of regulations on wages, consumer prices, and economic 
        growth.
    When testifying in opposition to H.R. 1074, OMB explained 
that H.R. 1074 would require it ``to compile detailed data that 
they do not now have, and undertake analyses that they do not 
now conduct, using scarce staff and contract resources, 
regardless of any practical analytic need as part of the 
rulemaking process.'' 4
---------------------------------------------------------------------------
    \4\ Testimony of G. Edward DeSeve, Deputy Director for Management, 
Office of Management and Budget, before the House Subcommittee on 
National Economic Growth, Natural Resources and Regulatory Affairs 
(March 24, 1999).
---------------------------------------------------------------------------
    In fact, an analysis of every ``program component,'' which 
is broadly defined as a set of related rules, would require a 
cost/benefit analysis of every major and minor rule. Pursuant 
to Executive Order 12866, the agencies--other than the 
independent agencies-- already analyze the cost and benefit of 
the 60 or so new major rules that are enacted each year. H.R. 
1074 would greatly increase the number of required analyses to 
include the 5000 or so major and minor rules that are enacted 
each year. In addition, the agencies would need to analyze the 
enormous number of rules that are already on the books.

            B. New Cost/Benefit Analyses Would Be Expensive

    It is a difficult task to ascertain the cost of conducting 
these new analyses. However, there are a few studies that 
provide some guidance. For instance, in March 1997, the 
Congressional Budget Office (CBO) found that the cost of 
conducting comprehensive cost/benefit analyses for 85 major 
rules averaged $573,000 per rule and took an average of three 
years to complete.5 Thus, the agencies already spend 
an estimated $35 million a year on the cost/benefit analyses 
for the 60 new major rules enacted each year. Similarly, when 
the Environmental Protection Agency (EPA) analyzed the costs 
and benefits of one program--the Clean Air Program--the 
analysis took seven years to complete and cost millions of 
dollars.
---------------------------------------------------------------------------
    \5\ Congressional Budget Office, Regulatory Impact Analysis: Costs 
at Selected Agencies and Implications for the Legislative Process, 13 
and 30 (March 1997).
---------------------------------------------------------------------------
    H.R. 1074 would require analysis of the estimated 5000 new 
rules promulgated each year and an analysis of the many rules 
already on the books. In addition, this information would need 
to be compiled in a number of different ways to show the costs 
and benefits of each agency, program, and program component. 
Thus, the cost of H.R. 1074 could be substantial.
    CBO estimated the cost of H.R. 1074 assuming that the bill 
did not require new analyses and assuming that OMB would 
provide a report similar to the report provided pursuant to 
appropriations language. Given these assumptions, CBO estimated 
that the cost would be less than $500,000 a year.6 
CBO did not, however, estimate the cost of H.R. 1074 assuming 
that OMB has to conduct new analyses.
---------------------------------------------------------------------------
    \6\ Congressional Budget Office, Cost Estimate for H.R. 1074, 
Regulatory Right-to-Know Act of 1999 (May 25, 1999).
---------------------------------------------------------------------------

       C. Aggregate Cost/Benefit Analyses Would Be Of Limited Use

    The new analyses likely would not be as useful as its 
proponents hope. Although OMB quantifies the aggregate costs 
and benefits of regulations as required by appropriations 
language, OMB cautions that there are ``enormous data gaps,'' 
accurate data is ``sparse,'' and agreed-upon methods for 
estimating are ``lacking.'' 7 Furthermore, OMB warns 
that the limits for using estimates ``in making recommendations 
about reforming or eliminating regulatory programs are severe. 
Aggregate estimates of the costs and benefits of regulation 
offer little guidance on how to improve the efficiency, 
effectiveness, or soundness of the existing body of 
regulations.'' 8
---------------------------------------------------------------------------
    \7\ Office of Management and Budget, Office of Information and 
Regulatory Affairs, Report to Congress on the Costs and Benefits of 
Federal Regulations, 2 (1998).
    \8\ Office of Management and Budget, Office of Information and 
Regulatory Affairs, Report to Congress on the Costs and Benefits of 
Federal Regulations, 5 (1998).
---------------------------------------------------------------------------
    Professor Lisa Heinzerling, an expert on regulatory 
accounting, testified:

          It is ironic that H.R. 1074 is called the 
        ``Regulatory Right-to-Know Act.'' It is ironic because, 
        if this bill is passed, the public will likely know 
        less rather than more about federal regulation. The 
        bottom-line estimates of costs and benefits required by 
        this bill hide moral and political judgments behind a 
        mask of technical expertise. The public is likely to 
        mistake the estimates' precision for accuracy and their 
        technicality for objectivity. In that case the numbers 
        generated as a result of this bill will be worse than 
        useless. They will threaten the very public awareness 
        the bill purports to embrace.9
---------------------------------------------------------------------------
    \9\ Testimony of Professor Lisa Heinzerling, Georgetown University 
Law Center, before the House Subcommittee on National Economic Growth, 
Natural Resources, and Regulatory Affairs (March 24, 1999).

    Similarly, when Professor Shapiro, another expert on 
regulatory accounting, testified on the Senate version of H.R. 
---------------------------------------------------------------------------
1074, he stated:

          My conclusion is that, as a matter of regulatory 
        policy and process, [regulatory accounting] is unlikely 
        to accomplish the objectives of its sponsors and more 
        likely will make regulatory oversight more, not less, 
        difficult. Analysts simply cannot accomplish the type 
        of precise calculations needed for regulatory 
        accounting, and even if they could, the results would 
        not be relevant to policy decisions. Worse, the 
        legislation is likely to mislead, rather than inform, 
        the American public. Finally, the legislation is likely 
        to distract OMB from effective regulatory 
        oversight.10
---------------------------------------------------------------------------
    \10\ Testimony of Professor Sidney Shapiro, School of Policy and 
Environmental Affairs, Indiana University, before the Senate Committee 
on Governmental Affairs (April 22, 1999).

    In addition, H.R. 1074 would require cost/benefit and 
impact analyses of a myriad of rules for which such analyses 
are useless. For instance, it would require a cost/benefit 
analysis and impact analyses for rules that make technical 
changes, such as correcting errors on federal forms. Additional 
examples are discussed in Section IV.

          D. Important Benefits Likely Would Be Underestimated

    During the Subcommittee markup, H.R. 1074 was improved by 
adoption of an amendment by Rep. Kucinich that requires an 
analysis of the beneficial impact of regulations on public 
health, safety, the environment, and other public policy goals. 
This amendment provided some balance to the bill, which had 
previously emphasized the costs, not their benefits.
    Despite the adoption of the Kucinich amendment, H.R. 1074 
still is likely to underestimate benefits. OMB states that 
``[v]alid and reliable data are particularly sparse on 
benefits, a fact that has been noted often by commentators in 
the literature and analysts in the field.'' 11 This 
underestimation of benefits is compounded by the fact that the 
analyses likely overstate the costs because they do not account 
for technological advances and industry's ability to adapt. For 
example, EPA estimated that it would cost $600 per ton to 
comply with the proposed acid rain controls. However, the 
actual cost today is less than $100 per ton.
---------------------------------------------------------------------------
    \11\ Office of Management and Budget, Office of Information and 
Regulatory Affairs, Report to Congress on the Costs and Benefits of 
Federal Regulations, 2 (September 30, 1997).
---------------------------------------------------------------------------
    In addition, many benefits are described in qualitative 
terms--such as the number of lives saved, reduction in illness, 
or the protection of civil rights--not in monetary terms. 
Although H.R. 1074 requires a description of qualitative 
benefits, this does not adequately address the problem. The 
focus of H.R. 1074 is the aggregate and net benefit 
calculations which reflect only the monetized costs and 
benefits and often fail to account for the most important 
benefits of regulation.

              E. Some Impact Analyses Would Be Duplicative

    Many of the requirements for impact analyses are 
duplicative. For instance, the Regulatory Flexibility Act (RFA) 
already requires agencies to examine the impact of proposed and 
existing rules on small businesses, small organizations, and 
small governments. The Unfunded Mandates Reform Act (UMRA) 
requires analyses of costs of federal mandates on state and 
local governments and the economy.

               II. Kucinich Taxpayer Protection Amendment

    Unfortunately, the Committee did not adopt the ``Taxpayer 
Protection Amendment'' offered by Rep. Kucinich. This amendment 
would have provided that:
          (a) OMB and the agencies are not required to generate 
        new data or conduct new analyses unless the benefits of 
        such data generation or analysis outweighs the cost,
          (b) the authorization of funds is limited to $1 
        million a year, and
          (c) the bill will sunset in four years.
Considering the potential cost of H.R. 1074 and the limited use 
of the analyses, this amendment would prevent a significant 
waste of taxpayer funds.
    Moreover, if, as proponents claim, H.R. 1074 would require 
no new analyses, the Committee's opposition to this amendment 
is unfounded. The amendment clearly provides that the funding 
limits would not apply to any analyses required by a separate 
law or Executive Order. For instance, the cost/benefit analyses 
of major rules conducted pursuant to Executive Order 12866 
would not be affected by this amendment. Furthermore, the $1 
million limit is twice as high as CBO's estimate of the costs 
of H.R. 1074 assuming that no new analyses are required.

                III. Waxman Corporate Welfare Amendemnt

    In addition, we are disappointed that the Committee did not 
adopt an amendment offeredby Rep. Waxman requiring disclosure 
of corporate welfare to regulated businesses, providing the American 
public access to a more complete picture of the costs and benefits of 
federal programs.

   IV. Examples of Regulations That Would be Subject to Cost-Benefit 
                        Analysis Under H.R. 1074

    H.R. 1074 would have a very broad application, requiring 
cost/benefit and impact analyses for all rules. In many 
instances these analyses would simply be a waste of money. The 
following are two examples of the wasteful analyses that would 
be required.
    Guidelines for Drawbridge Operations. The U.S. Coast Guard 
issues rules regulating the operation of over 460 drawbridges. 
A temporary rule must be issued and published in the Federal 
Register each time bridge maintenance would change the 
drawbridge schedule. For example, on May 14, 1999, the Coast 
Guard issued a temporary rule to allow the Louisiana Department 
of Transportation and Development to keep a bridge in 
Hackberry, Louisiana, closed for 15 hours to replace the 
emergency electrical power supply. There is no need to perform 
a cost/benefit analysis of these kinds of rules because they 
are common sense requirements that are generally issued without 
controversy. In the case of Hackberry, Louisiana, for example, 
it was the state of Louisiana--not the federal government--that 
requested the rule in order to perform the necessary 
maintenance. H.R. 1074, however, would require cost/benefit 
analyses for these types of rules.
    Education Assistance Mandated by Statute. The Department of 
Veterans Affairs published a rule in the May 14, 1999, Federal 
Register, to increase educational assistance payable to 
reservists by approximately 20 percent. This rule was a purely 
ministerial function since the 20 percent increase was mandated 
by the Veterans Benefits Act of 1998. Yet under H.R. 1074, the 
federal government may now have to spend scarce taxpayer 
dollars preparing a cost/benefit analysis of this requirement, 
including an analysis of the rule's impact on wages, 
productivity, and economic growth.

                                   Henry A. Waxman.
                                   Dennis J. Kucinich.
                                   Jan Schakowsky.
                                   Elijah E. Cummings.
                                   John F. Tierney.
                                   Eleanor H. Norton.
                                   Danny K. Davis.
                                   Chaka Fattah.
                                   Rod R. Blagojevich.
                                   Tom Allen.
                                   Major R. Owens.
                                   Tom Lantos.
                                   Carolyn B. Maloney.
                                   Patsy T. Mink.

                          Citizens for Sensible Safeguards,
                                      Washington, DC, May 18, 1999.
House of Representatives, Washington, DC.
    Dear Representatives: On behalf of Citizens for Sensible 
Safeguards, a broad-based coalition of more than 300 public 
interest organizations, we are writing to express our strong 
opposition to ``The Regulatory Right-to-Know Act'' (H.R. 1074), 
which is the subject of a May 20 markup in the Government 
Reform Committee. H.R. 1074 would require OMB to conduct an 
undoable analytical report on the entire federal regulatory 
system that we believe would only drain scarce agency resources 
and create confusion over important health, safety, and 
environmental protections.
    Congress has required OMB to conduct a cumulative cost-
benefit analysis of agency rules--referred to as regulatory 
accounting--through appropriations riders over the last three 
years, and in its two completed reports, OMB has made a special 
point to underscore the inherent uncertainty of such an 
endeavor. ``. . . we still believe that the limitations of 
these estimates for use in making recommendations about 
reforming or eliminating regulatory programs are severe,'' OMB 
stated in its second report, released in February. ``Aggregate 
estimates of the costs and benefits offer little guidance on 
how to improve the efficiency, effectiveness, or soundness of 
the existing body of regulations.''
    Yet despite these warnings, H.R. 1074 seeks to dramatically 
expand analytical requirements contained in the previous 
appropriations riders and has removed language requiring 
analysis only ``to the extent feasible.'' Specifically, the 
legislation calls for OMB to estimate the annual costs and 
benefits of rules and paperwork (a) in the aggregate, (b) by 
agency, agency program, and program component, and (c) by major 
rule. In addition, OMB would have to assess the direct and 
indirect impacts of federal rules and paperwork on state, local 
and tribal governments, small business, wages, economic growth, 
and distributional effects.
    One glaring problem here is that much of the information 
called for is not currently generated during agency 
rulemakings. When the first appropriations rider was passed, a 
colloquy in the Senate made clear that the intent was not to 
generate new data or studies, but rather to pull together 
existing information. That would not longer be the case under 
H.R. 1074. For instance, agencies are not currently required to 
conduct cost-benefit analyses for paperwork under the Paperwork 
Reduction Act; rather, the agency is to assess ``practical 
utility'' and burdens imposed. Testifying against the 
legislation OMB Deputy Director Ed DeSeve explained, ``To 
satisfy H.R. 1074, agencies may have to be called upon to 
compile detailed data that they do not now have, and undertake 
analyses that they do not now conduct, using scarce staff and 
contract resources, regardless of any practical analytic need 
as part of the rulemaking process.''
    But even if resources were not a problem, there would 
always be the problem of reliability. Inorder to meet the 
requirements of the regulatory accounting report, OMB has, not 
surprisingly, found it necessary to put cumulative costs and benefits 
in terms of dollars and cents. And indeed, H.R. 1074 puts a premium on 
monetization, asking OMB to show ``net benefits.''
    However, agencies often evaluate benefits using qualitative 
factors, such as the reduction in health or safety risks to 
children, while costs are more easily stated in monetary terms. 
Such an analytical discrepancy is only accentuated when you 
attempt to add up all federal regulation at once in a monetized 
study, producing numbers that are greatly misleading.
    When seemingly qualitative factors are converted to 
monetized figures--as OMB has begun to do to fulfill its 
regulatory accounting obligations--value judgments become 
hidden behind a mask of technical expertise. For instance, OMBs 
most recent report incorporated the estimated benefits of 
reducing lead in gasoline, including the prevention of IQ loss 
in children. Although it's hard to imagine a parent who would 
regard their child's drop in IQ as adequately captured by an 
estimated loss of future earning capacity, this is actually one 
of the many value judgments buried in OMB's numbers.
    Other problems with reliability exist as well, many of 
which are elaborated on in OMB's two reports. Perhaps most 
significant, a study of this kind must rely on agency 
Regulatory Impact Analyses (RIAs) that are done before rules 
are actually on the books--even though it is well documented 
that regulatory costs decrease over time as a result of 
technological advances, ``learning by doing,'' and other 
factors. (EPA, for example, estimated in 1990 that acid rain 
controls would cost electrical utilities about $750 per ton of 
sulfur dioxide emissions; yet the actual cost today is less 
than $100 per ton, billions of dollars less than what was 
initially anticipated.) Adding to the problem that ``net 
benefits'' are likely to be understated is the whole series of 
new subanalyses (listed above) mandated by H.R. 1074, all aimed 
at elevating cost considerations.
    Moreover, H.R. 1074 requires OMB to subject its findings to 
peer review (on top of a public notice and comment period) by 
``two or more organizations'' that are independent of 
government and ``have nationally recognized expertise in 
regulatory analysis and regulatory accounting.'' There are only 
a handful of groups who would qualify under this language, and 
virtually all are more concerned with the cost side of the 
regulatory equation. Given that the bill instructs that OMB 
``shall use the peer review comments'' in preparing its report, 
this could allow a select and privileged few to greatly bias 
results.
    In sum, by allowing crucial value judgments to be masked by 
monetized figures, we believe a report of this kind implies a 
sort of detached objectivity that simply doesn't exist, and in 
doing so creates less transparency, not more, as proponents 
suggest. Moreover, the slanted analysis required by H.R. 1074 
appears to be intended as a political weapon to undermine 
critical health, safety, and environmental standards. Certainly 
such a regulatory accounting has no real utility for public 
policy, as OMB has pointed out. And yet, as constructed by this 
legislation, it could prove extremely burdensome for already 
cash-strapped federal agencies.
    For these reasons, we strongly urge you to oppose H.R. 
1074, ``The Regulatory Right-to-Know Act.'' If you have any 
questions on this bill or would like to meet with coalition 
members, please contact Reece Rushing at 202-234-8494.
            Sincerely,

    AFL-CIO.
    AFSCME.
    Alton Park/Piney Woods Neighborhood Improvement Corp (TN).
    American Lung Association.
    American Lung Association of Tennessee.
    American Nurses Association.
    American Public Health Association.
    Americans for Democratic Action.
    Center for Marine Conservation.
    Center for Science in the Public Interest.
    Citizen Action of Southern Tier (NY).
    Citizens Committee to Complete the Refuge.
    Citizen's Environmental Coalition (NY).
    Citizen's Environmental Coalition of Western New York.
    Clean Air Council (PA).
    Clean Water Council.
    Coalition Organized to Protect the Environment (NY).
    Consumers Union.
    Community Nutrition Institute.
    Cook Inlet Keeper.
    Defenders of Wildlife.
    Earth Concerns of Oklahoma.
    Earthjustice Legal Defense Fund.
    Environmental Advocates (NY).
    Environmental Defense Fund.
    Environmental Working Group.
    Friends of the Earth.
    Green Congress Campaign, Tennessee Environmental Council.
    Hudson River Sloop Clearwater.
    Kentucky Resources Council, Inc.
    League of Women Voters of Nashville.
    Long Island Progressive Coalition.
    Mining Impact Coalition of Wisconsin.
    National Campaign for Pesticide Policy Reform.
    National Citizens' Coalition for Nursing Home Reform.
    National Environmental Trust.
    Natural Resources Council of Maine.
    Natural Resources Defense Council.
    New Jersey Environmental Lobby.
    New York City Environmental Justice Alliance.
    New York Public Interest Research Group.
    New York Rivers United.
    New York Statewide Senior Action.
    New World Energy Systems (NM).
    Northwoods Wilderness Recovery (MI).
    OMB Watch.
    Physicians for Social Responsibility.
    Professionals Network for Social Responsibility.
    Public Citizen.
    Sierra Club.
    Staten Island Citizens for Clean Air.
    Tennessee Citizen Action.
    Tenneessee Environmental Council.
    Tennessee Industrial Renewal Network.
    The Arc of the United States.
    The Lake Superior Alliance.
    Tip of the Mitt Watershed Council (Petoskey, MI).
    UAW.
    United Church of Christ, Office for Church in Society.
    United Steelworkers of America.
    U.S. PIRG.
    Westchester People's Action Coalition (NY).
    Western N.Y. Council on Occupational Safety & Health.

                            ADDITIONAL VIEWS

    The Minority Views section of this report includes various 
incorrect or misleading assertions that need to be clarified in 
this report. First, H.R. 1074 has wide bipartisan and public 
support, including from the seven major bipartisan 
organizations representing State and local elected officials. 
Second, the Minority Views section incorrectly states, 
``Proponents of the bill often state that H.R. 1074 merely 
codifies language that was included in previous appropriations 
bills.'' Instead, the authors of H.R. 1074 have consistently 
stated that the bill builds on provisions in the 1997, 1998, 
and 1999 Treasury and General Government Appropriations Acts.
    Third, the Minority Views section asserts that H.R. 1074 
``would require a cost/benefit analysis of every major and 
minor rule'' and that ``H.R. 1074 would greatly increase the 
number of required analyses to include the 5000 or so major and 
minor rules that are enacted each year.'' This assertion is 
incorrect. The bill requires no new regulatory impact analyses. 
Fourth, the minority section asserts, ``CBO estimated the cost 
of H.R. 1074 assuming that the bill did not require new 
analyses . . .  CBO did not, however, estimate the cost of H.R. 
1074 assuming that OMB has to conduct new analyses.'' This 
assertion is incorrect. CBO's estimate is based on the amended 
bill as reported by the Committee. H.R. 1074 does not require 
any new rule-by-rule cost-benefit analyses or any new rule-by-
rule impact analyses. Instead, the bill provides for the 
combining of sets of related rules in broad categories. Except 
for already-required regulatory impact analyses for major 
rules, the various analytical requirements relate to 
information after rules are issued. The bill provides OMB with 
substantial discretion in how to address the various analytical 
requirements. CBO is specifically aware of this discretion. 
Indeed, for the past three years, OMB has been statutorily 
required to prepare a report which provides an analysis of the 
costs and benefits of Federal regulations. Thus, CBO is correct 
in its analysis of the costs of H.R. 1074.
    Fifth, H.R. 1074 does not duplicate requirements under the 
Regulatory Flexibility Act or the Unfunded Mandates Reform Act. 
Instead, OMB can use analyses provided under these Acts to 
prepare the annual accounting statement and associated report, 
required by H.R. 1074. Sixth, the examples cited in the 
Minority Views section are incorrect. The bill does not require 
a cost-benefit analysis for individual non-major rules, such as 
a U.S. Coast Guard temporary rule regulating the operation of a 
drawbridge or a Department of Veterans Affairs ministerial 
rule. Moreover, nothing in H.R. 1074 limits any action or 
requires new analyses before an agency action. Finally, the 
Minority Views section includes a footnote stating ``Over 60 
groups opposing H.R. 1074 signed onto a May 18, 1999, letter.'' 
The Committee is uncertain what ``signed on'' means and has 
requested but has not yet received any signed letters from 
these organizations in support of or opposition to H.R. 1074.
    The value of the information provided in the bill to 
quality management in government is well worth the production 
of OMB's report. The required annual accounting statement and 
associated report will increase confidence in government and 
result in better decisions. The Committee believes that 
Congress and the American people have a right to know the 
costs, benefits, and impacts of Federal regulatory programs.

                                                    David McIntosh.

                            Committee on Government Reform,
                                      Washington, DC, June 3, 1999.
Hon. Henry Waxman,
Ranking Member, House Committee on Government Reform, Rayburn House 
        Office Building, Washington, DC.
    Dear Henry: Today, the Majority staff of the Committee on 
Government Reform received a copy of an unsigned letter, dated 
May 18, 1999, for insertion in the Committee's report on H.R. 
1074, ``The Regulatory Right-to-Know Act of 1999.'' The 
Committee's deadline for the Minority Views section of the 
report was a week ago. A footnote in the Minority Views 
section, which was timely filed, stated ``Over 60 groups 
opposing H.R. 1074 signed onto a May 18, 1999, letter.'' We are 
uncertain what ``signed on'' means. On April 6th, to ensure 
accuracy, we requested in writing for the Minority staff to 
submit signed letters from any organizations mentioned in 
letters intended for the record. Today, almost two months 
later, the Committee has yet to receive a single signed letter 
from any of the organizations that allegedly ``signed on'' to 
the May 18th letter. In contrast, the letters of support for 
H.R. 1074 mentioned in the Need for Legislation section of the 
Report were all signed and were all on organizational 
letterhead.
    Unfortunately, time does not permit for us to verify the 
authenticity of the views of the organizations listed in the 
unsigned letters. Besides not having the names of persons whom 
we could contact by telephone or in writing, there are no 
addresses for us to send followup letters. Today, we were 
unable to identify several of the organizations, such as the 
``Alton Park/Piney Woods Neighborhood Improvement Corp (TN),'' 
which has no telephone listing anywhere in Tennessee, ``Citizen 
Action of Southern Tier (NY),'' which has no telephone listing 
anywhere in New York, and the ``National Campaign for 
Pesticides Policy Reform,'' which we discovered formerly 
existed in the District of Columbia. Also, we discovered that 
many of the organizations such as the ``National Citizens' 
Coalition for Nursing Home Reform,'' are Sec. 501(c)(3) non-
profit organizations, whose tax status is dependent on 
adherence to certain restrictions on lobbying Congress.
    Even though the H.R. 1074 Report was completed last week, 
we have agreed to include the unsigned letters. However, we are 
concerned about such a precedent and the authenticity of the 
claimed opposition to H.R. 1074.
            Sincerely,
                                   David M. McIntosh,
                                           Chairman, Subcommittee on 
                                               National Economic 
                                               Growth, Natural 
                                               Resources and Regulatory 
                                               Affairs.

                                  
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