[Senate Report 115-121]
[From the U.S. Government Publishing Office]


                                                      Calendar No. 158
115th Congress      }                                   {       Report
                                 SENATE
 1st Session        }                                   {      115-121
_______________________________________________________________________

                                     

             EARLY PARTICIPATION IN REGULATIONS ACT OF 2017

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                 S. 579

   TO REQUIRE AGENCIES TO PUBLISH IN ADVANCE NOTICE OF PROPOSED RULE 
                         MAKING FOR MAJOR RULES

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                 June 28, 2017.--Ordered to be printed

                                  ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

69-010                         WASHINGTON : 2017 




















        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona                 CLAIRE McCASKILL, Missouri
ROB PORTMAN, Ohio                    THOMAS R. CARPER, Delaware
RAND PAUL, Kentucky                  JON TESTER, Montana
JAMES LANKFORD, Oklahoma             HEIDI HEITKAMP, North Dakota
MICHAEL B. ENZI, Wyoming             GARY C. PETERS, Michigan
JOHN HOEVEN, North Dakota            MAGGIE HASSAN, New Hampshire
STEVE DAINES, Montana                KAMALA D. HARRIS, California

                  Christopher R. Hixon, Staff Director
                Gabrielle D'Adamo Singer, Chief Counsel
                   Satya P. Thallam, Chief Economist
               Margaret E. Daum, Minority Staff Director
               Stacia M. Cardille, Minority Chief Counsel
       Charles A. Moskowitz, Minority Senior Legislative Counsel
                 Katherine C. Sybenga, Minority Counsel
                     Laura W. Kilbride, Chief Clerk



















                                                      Calendar No. 158
115th Congress      }                                   {       Report
                                 SENATE
 1st Session        }                                   {      115-121

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



 
             EARLY PARTICIPATION IN REGULATIONS ACT OF 2017

                                _______
                                

                 June 28, 2017.--Ordered to be printed

                                _______
                                

 Mr. Johnson, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 579]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 579) to require 
agencies to publish an advance notice of proposed rule making 
for major rules, having considered the same, reports favorably 
thereon with amendments and recommends that the bill, as 
amended, do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History..............................................4
 IV. Section-by-Section Analysis......................................5
  V. Evaluation of Regulatory Impact..................................5
 VI. Congressional Budget Office Cost Estimate........................6
VII. Changes in Existing Law Made by the Bill, as Reported............7

                         I. Purpose and Summary

    The Early Participation in Regulations Act of 2017 requires 
Federal agencies to solicit and consider public comment early 
in the rulemaking process through an advanced notice of 
proposed rulemaking (ANPRM). Considering alternative solutions, 
articulated by or flowing from public comment at an earlier 
stage, ensures that agencies will consider a broader range of 
policies before they give preference to a particular position 
to the exclusion of others. The bill requires that for certain 
major rules, agencies must publish an ANPRM in the Federal 
Register at least 90 days before publishing a notice of 
proposed rulemaking (NPRM).
    The ANPRM must identify the nature and significance of the 
problem the agency seeks to address and the legal authority 
under which the agency may do so, generally describe regulatory 
alternatives under consideration, and describe an achievable 
objective and metrics by which the agency will measure progress 
on that objective. The agency must then allow at least 60 days 
for public comment. The bill provides an exemption, upon the 
determination of the Administrator of the Office of Information 
and Regulatory Affairs (OIRA), for rules in which complying 
with the requirements of the legislation would not serve the 
public interest, or would be both unduly burdensome and 
duplicative of processes otherwise required by law. The bill 
also exempts those rules that do not require a notice of 
proposed rulemaking, and those otherwise exempted by law. The 
bill does not require nor preclude agencies from responding to 
comments submitted under the ANPRM.\1\
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    \1\On October 7, 2015, the Committee approved S. 1820, the Early 
Participation in Regulations Act of 2015. That bill is substantially 
similar to S. 579. Accordingly, this committee report is in large part 
a reproduction of Chairman Johnson's committee report for S. 1820, S. 
Rep. No. 114-343 (2016).
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              II. Background and the Need for Legislation

    The Administrative Procedure Act (APA), enacted nearly 70 
years ago, establishes the basic procedures for agency 
rulemaking--the guidelines governing the administrative 
state.\2\ As one scholar put it, it is ``the bill of rights for 
the new regulatory state . . . establish[ing] the fundamental 
relationship between regulatory agencies and those whom they 
regulate--between government, on the one hand, and private 
citizens, business, and the economy, on the other hand.''\3\ 
The APA codified ``patterns of good behavior'' by 
administrative agencies, patterns that had become ``general, 
though not universal'' in practice.\4\
---------------------------------------------------------------------------
    \2\Administrative Procedure Act, 5 U.S.C. Sec. 553; see also 5 
U.S.C. Sec. 551(4) (defining the parameters of rulemaking: it can 
include ``formulating, amending, or repealing a rule'').
    \3\George B. Shepherd, Fierce Compromise: the Administrative 
Procedure Act Emerges from New Deal Politics, 1996 Northwestern U. L. 
Rev. 90, 1558.
    \4\Walter Gellhorn, The Administrative Procedure Act: The 
Beginnings, 1986 Va. L. Rev. 72, 232.
---------------------------------------------------------------------------
    The APA, however, does not contemplate the use of an ANPRM. 
Instead, it only requires that agencies, where applicable, 
issue a NPRM in the Federal Register before formulating a final 
rule. NPRMs, which articulate the agency's proposed rule on a 
certain policy issue, require much more specificity than their 
ANPRM counterparts. Part of this specificity arises from the 
fact that at the NPRM stage, the agency has already chosen a 
policy trajectory, and so must detail the specifics of that 
policy, including ``the terms or substance of the proposed rule 
or a description of the subjects and issues involved.''\5\ More 
starkly, some scholars and business executives argue that, 
``[b]ecause of the incentives they face, agencies make 
decisions to regulate before any evidence that might suggest 
regulations are not needed. They do so purposely with little--
if any--input from stakeholders or internal analysis.''\6\ 
Because the agency has to dedicate time and resources to the 
contents of an NPRM later in the rulemaking process than would 
be required of an ANPRM, while both provide notice and 
opportunity to comment, the public's ability to persuade the 
agency of alternatives may be less effective by the NPRM phase. 
As one regulatory scholar put it, ``[a]gencies often write 
regulations before they do the basic homework that would help 
them design the best possible regulation,'' resulting in the 
```[r]eady-fire-aim' rulemaking'' problem.\7\
---------------------------------------------------------------------------
    \5\Administrative Procedure Act, 5 U.S.C. Sec. 553(b)(3).
    \6\Raising the Agencies' Grades: Protecting the Economy, Assuring 
Regulatory Quality and Improving Assessments of Regulatory Need: 
Hearing Before the H. Comm. on the Judiciary Subcomm. on the Courts, 
Commercial and Administrative Law, 111th Cong. (2011) (focusing on the 
statement of Richard Williams).
    \7\Jerry Ellig, Ready-fire-aim Rulemaking, The Hill, Sep. 27, 2013.
---------------------------------------------------------------------------
    In a 2015 hearing, former OIRA Administrator John Graham 
echoed this sentiment:

          One of the things I think members should be aware of 
        is that agencies take public comment and public 
        participation after they have proposed a solution. And 
        like all human beings, once we think we know what the 
        solution is, we put it on the table, it is not that 
        easy to move people off that original proposal . . . In 
        some of these rules it is probably better if the agency 
        says, ``Hey we are thinking about regulating in this 
        area. We are going to do this advance notice where we 
        are going to lay out some of the data, what we think 
        the problems are, look at a range of ideas,'' and not 
        lock themselves into anything. Take comment at that 
        stage, and then once they have that, then they go to a 
        proposal.\8\
---------------------------------------------------------------------------
    \8\Examining Federal Rulemaking Challenges and Areas of Improvement 
Within the Existing Regulatory Process: Hearing Before the S. Comm. on 
Homeland Security & Governmental Affairs Subcomm. on Regulatory Affairs 
& Fed. Mgmt., 114th Cong. (2015) 27-28 (focusing on the statement of 
Hon. John Graham).

    ANPRMs would give notice of and invite public comment on a 
much more generalized policy proposal before it reaches the 
proposed rule stage. Comments responsive to ANPRMs can be as 
diverse as to include underlying information the agency should 
weigh, or the benefits of alternative policy proposals the 
agency should consider.
    While the APA does not require ANPRMs as part of the 
rulemaking process, some agencies, such as the National Oceanic 
and Atmospheric Administration, the Department of 
Transportation, and Consumer Product Safety Commission, 
routinely issue ANPRMs for rules promulgated under their 
authority.\9\ However, the majority of agencies do so for 
significant rules only infrequently.\10\
---------------------------------------------------------------------------
    \9\Sofie E. Miller & Saayee Arumugam, Notice & Comment: How 
Agencies Use Advance Notices of Proposed Rulemaking, 2015 Geo. Wash. 
Univ. Reg. Studies Ctr. 6 (Jan. 23, 2015).
    \10\Id. For example, from 2005 through 2014, 59 percent of ANPRMs 
were for ``Nonsignificant'' and ``Substantive, but not `Significant''' 
rules. Only eight percent were for ``Economically Significant'' or 
``Major'' rules. More generally, during that same period, all agencies 
combined issued an average of less than 50 ANPRMs per year, whereas the 
number of final rules is in the thousands.
---------------------------------------------------------------------------
    A 2015 report concludes that ``[i]f regulatory reform 
proposals seek to increase opportunities for the public to 
influence important regulatory decisions, agency use of advance 
notices has room for improvement.''\11\ As another former OIRA 
Administrator, Susan Dudley, stated, the use of ANPRMs ``could 
be valuable for soliciting input from knowledgeable parties on 
a range of possible approaches, data, models, etc., before 
particular policy options have been selected.''\12\
---------------------------------------------------------------------------
    \11\Id. at 6.
    \12\A Review of Regulatory Reform Proposals: Hearing Before the S. 
Comm. on Homeland Security & Governmental Affairs, 114th Cong. (2015) 
(offering the prepared statement of Hon. Susan Dudley) (Sept. 16, 
2015).
---------------------------------------------------------------------------
    Worries that adding additional statutory requirements 
requiring time for public comment will inhibit or otherwise 
delay agency efforts to promulgate necessary regulations--the 
so-called ``ossification theory''--have been questioned.\13\ A 
2012 report noted that ``statutory and executive order 
analytical requirements, while potentially time consuming, were 
not the major factor in determining the amount of time that it 
took for the agencies to issue these rules . . . [instead] they 
said most of the time is taken up with doing the basic science 
and other preparations for the rule, not the crosscutting 
analytical requirements.''\14\ Additionally, whereas 
``economically significant'' rules do trigger additional 
analytical requirements on agencies--notably a ``require[ment] 
to complete a detailed cost-benefit analysis''\15\--the OIRA 
review for such rules is on average shorter than rules that do 
not entail such requirements.\16\
---------------------------------------------------------------------------
    \13\Jason Webb Yackee & Susan Webb Yackee, Testing the Ossification 
Thesis: An Empirical Examination of Federal Regulatory Volume and Speed 
from 1950-1990, 2012 Geo. Wash. L. Rev. 80, 1414; see also Stephen M. 
Johnson, Ossification's Demise? An Empirical Analysis of EPA Rulemaking 
from 2001-2005, 2008 Environmental L. Rev. 38, 101.
    \14\Curtis Copeland, Regulatory Analysis Requirements: A Review and 
Recommendations for reform, Report for the Administrative Conference of 
the United States (2012) at 67 (citing internal Government 
Accountability Office interviews).
    \15\Maeve P. Carey, Counting Regulations: An Overview of 
Rulemaking, Types of Federal Regulations, and Pages in the Federal 
Register, Report R43056, Cong. Research Serv. 11 (2015).
    \16\Id. at 13. The author notes there are potentially pre-review 
reasons why this is the case. Nevertheless, it belies the intuition 
that adding rulemaking requirements necessarily results in delays.
---------------------------------------------------------------------------
    S. 579 would require agencies to publish an ANPRM in the 
Federal Register for certain major rules at least 90 days 
before publishing a NPRM. Building ANPRMs into the rulemaking 
process for major rules would allow public participation at a 
crucial time in the rulemaking process, just as--but not 
after--policy proposals are formulated. The value of public 
comment, both for the public to be heard, and for the agency to 
gather useful input, is highest at this earlier stage. Here, 
public comment can help inform the rulemaking process, instead 
of merely corroborating or justifying inceptive preferences.

                        III. Legislative History

    Senator James Lankford (R-OK) introduced S. 579 on March 8, 
2017, with Senator Heidi Heitkamp (D-ND). The bill was referred 
to the Committee on Homeland Security and Governmental Affairs. 
Senators Orrin Hatch (R-UT) and Pat Roberts (R-KS) later joined 
as co-sponsors of the bill. The Committee considered S. 579 at 
a May 17, 2017 business meeting.
    The Committee ordered S. 579 reported favorably on May 17, 
2017, by a roll call vote of 11 yeas to 3 nays. Senators voting 
in the affirmative were Senators Johnson, McCain, Portman, 
Paul, Lankford, Enzi, Hoeven, Daines, McCaskill, Heitkamp, and 
Peters. Senators voting in the negative were Senators Tester, 
Hassan, and Harris. For the record only, Senator Carper voted 
nay by proxy.

        IV. Section-by-Section Analysis of the Bill, as Reported


Section 1. Short title

    This section provides the bill's short title, the ``Early 
Participation in Regulations Act of 2017.''

Section 2. Advance notice of proposed rulemaking

    This section defines the term ``major rule'' as any rule 
that the OIRA Administrator determines is likely to impose 
annual economic effects of $100,000,000, significantly 
increases costs or prices, or otherwise significantly affect 
competition, employment, investment or other economic 
conditions. The section also defines ``Office of Information 
and Regulatory Affairs'' as that established under 44 U.S.C. 
Sec. 3503.
    Subsection (1) provides that ANPRMs must be published in 
the Federal Register at least 90 days prior to publication of a 
NPRM.
    Subsection (2) lays out the required contents of any ANPRM. 
The ANPRM must identify the nature and significance of the 
problem the agency seeks to address with the major rule; any 
regulatory alternatives under consideration; the legal 
authority under which the major rule may be proposed; and an 
achievable objective for the major rule and metrics by which 
the agency can measure progress. The agency must solicit 
comment from interested persons, leaving the comment period 
open for at least 60 days.
    Subsection (3) lists three circumstances in which an agency 
is excepted from having to issue the ANPRM required by the 
bill: (1) if the agency is not required to publish a notice of 
proposed rulemaking for the major rule; (2) if the OIRA 
Administrator determines that complying with the bill's 
requirements for the major rule would not be in the public 
interest, or would be both unduly burdensome and duplicative of 
processes already required by existing statutory requirements; 
or (3) if the agency is otherwise specifically exempted by law.
    Subsection (4) exempts the OIRA Administrator's 
determinations pursuant to subsection (3) from judicial review. 
This subsection additionally provides that any deviation 
between the policies set forth in the agency's ANPRM under 
section (2) and any final agency action shall not be considered 
by a reviewing court to be arbitrary, capricious, an abuse of 
discretion, or otherwise not in accordance with the law under 
the APA.

                   V. Evaluation of Regulatory Impact

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill and determined 
that the bill will have no regulatory impact within the meaning 
of the rules. The Committee agrees with the Congressional 
Budget Office's statement that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act and would impose no costs on 
state, local, or tribal governments.

             VI. Congressional Budget Office Cost Estimate

                                                     June 21, 2017.
Hon. Ron Johnson,
Chairman, Committee on Homeland Security and Governmental Affairs, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 579, the Early 
Participation in Regulations Act of 2017.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

S. 579--Early Participation in Regulations Act of 2017

    S. 579 would amend the Administrative Procedures Act to 
require agencies to publish an Advance Notice of Proposed 
Rulemaking (ANPRM) for major rules in the Federal Register at 
least 90 days before publishing a Notice of Proposed Rulemaking 
(NPRM). Under the bill, major rules would include all 
regulations that are likely to result in an annual effect on 
the economy of $100 million or more; a major increase in prices 
or costs for consumers, industry, government agencies or 
individual regions; or a significant impact on U.S. companies 
that compete with foreign companies.
    Based on an analysis of information provided by the 
Congressional Research Service and selected agencies on the 
current regulatory process, CBO estimates that the executive 
branch usually issues between 3,000 and 4,000 final rules each 
year, of which approximately 70 would be defined as major under 
the bill. Agencies seldom issue an ANPRM; however, CBO expects 
that most of the information needed to publish one also is 
needed for the NPRM. Based on the costs of printing such 
notices and the necessary work to publish one additional 
notice, CBO estimates that preparing and publishing 
approximately 70 ANPRMs would cost about $1 million a year 
governmentwide. Such spending would be subject to the 
availability of appropriated funds. Additionally, CBO expects 
that adding the requirement to publish an ANPRM would not 
significantly delay the implementation of final regulations.
    CBO expects that any change to the regulatory process, 
including more public involvement, could lead to changes in 
proposed and final rules. However, CBO has no basis to estimate 
any budgetary effects from such changes.
    Enacting the bill could affect direct spending by agencies 
not funded through annual appropriations; therefore, pay-as-
you-go procedures apply. CBO estimates, however, that any net 
increase in spending by those agencies would be negligible. 
Enacting S. 579 would not affect revenues.
    CBO estimates that enacting S. 579 would not increase net 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2028.
    S. 579 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of State, local, or tribal 
governments.
    The CBO staff contact for this estimate is Matthew 
Pickford. The estimate was approved by H. Samuel Papenfuss, 
Deputy Assistant Director for Budget Analysis.

       VII. Changes in Existing Law Made by the Bill, as Reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 579 as reported are shown as follows (existing law proposed 
to be omitted is enclosed in brackets, new matter is printed in 
italic, and existing law in which no change is proposed is 
shown in roman):

UNITED STATES CODE

           *       *       *       *       *       *       *


TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES

           *       *       *       *       *       *       *


PART I--THE AGENCIES GENERALLY

           *       *       *       *       *       *       *



CHAPTER 5--ADMINISTRATIVE PROCEDURE

           *       *       *       *       *       *       *



Subchapter II--Administrative Procedure

           *       *       *       *       *       *       *



SEC. 551. DEFINITIONS

          (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 that the 
        Administrator of the Office of Information and 
        Regulatory Affairs determines is likely to impose--
                  (A) an annual effect on the economy of 
                $100,000,000 or more;
                  (B) a major increase in costs or prices for 
                consumers, individual industries, Federal, 
                State, local, or tribal government agencies, or 
                geographic regions; or
                  (C) significant 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) ``Office of Information and Regulatory Affairs'' 
        means the office established under section 3503 of 
        title 44 and any successor to that office.

           *       *       *       *       *       *       *


SEC. 553. RULE MAKING

    (a) ***

           *       *       *       *       *       *       *

    (f) Advance Notice of Proposed Rule Making for Major 
Rules.--
          (1) In general.--Except as provided in paragraph (3), 
        not later than 90 days before the date on which an 
        agency publishes a notice of proposed rule making for a 
        major rule in the Federal Register, the agency shall 
        publish an advance notice of proposed rule making for 
        the major rule in the Federal Register.
          (2) Requirements.--An advance notice of proposed rule 
        making published under paragraph (1) shall--
                  (A) include a written statement identifying, 
                at a minimum--
                          (i) the nature and significance of 
                        the problem the agency may address with 
                        a major rule, including data and other 
                        evidence and information on which the 
                        agency expects to rely for the proposed 
                        major rule;
                          (ii) a general description of 
                        regulatory alternatives under 
                        consideration;
                          (iii) the legal authority under which 
                        a major rule may be proposed, including 
                        whether a rule making is required by 
                        statute, and if so, whether by a 
                        specific date, or whether the agency 
                        has discretion to commence a rule 
                        making; and
                          (iv) an achievable objective for the 
                        major rule and metrics by which the 
                        agency expects to measure progress 
                        toward that objective;
                  (B) solicit written data, views, and argument 
                from interested persons concerning the 
                information and issues addressed in the advance 
                notice; and
                  (C) provide for a period of not less than 60 
                days for interested persons to submit such 
                written data, views, or argument to the agency.
          (3) Exceptions.--This subsection shall not apply to a 
        major rule if--
                  (A) the agency proposing the major rule is 
                not required to publish a notice of proposed 
                rulemaking in the Federal Register for the 
                major rule under subsection (b)(B);
                  (B) the Administrator of the Office of 
                Information and Regulatory Affairs determines 
                that complying with the requirements described 
                in this subsection--
                          (i) would not serve the public 
                        interest; or
                          (ii) would be unduly burdensome and 
                        duplicative of processes required by 
                        specific statutory requirements as 
                        rigorous as those prescribed in 
                        paragraph (2); or
                  (C) the agency proposing the major rule is 
                otherwise specifically exempted by law from the 
                notice and comment rule making procedures under 
                this section.
          (4) Judicial review.--
                  (A) In general.--A determination made by the 
                Administrator of the Office of Information and 
                Regulatory Affairs in accordance with paragraph 
                (3)(B) shall not be subject to judicial review.
                  (B) Arbitrary and capricious.--Any deviation 
                between policies set forth in the written 
                statement of an agency under paragraph (2)(A) 
                and any final agency action shall not be 
                considered arbitrary, capricious, an abuse of 
                discretion, or otherwise not in accordance with 
                the law under section 706(2)(A).

                                  [all]