[Senate Report 117-273]
[From the U.S. Government Publishing Office]


                                                      Calendar No. 672
117th Congress      }                           {         Report
                                SENATE
 2d Session         }                           {         117-273
_______________________________________________________________________

                                     


                           SMART ACT OF 2021

                               __________

                              R E P O R T

                                 OF THE

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              TO ACCOMPANY

                                S. 2801

            TO AMEND TITLE 5, UNITED STATES CODE, TO IMPROVE
           THE EFFECTIVENESS OF MAJOR RULES IN ACCOMPLISHING
                THEIR REGULATORY OBJECTIVES BY PROMOTING
              RETROSPECTIVE REVIEW, AND FOR OTHER PURPOSES

             
              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


               December 19, 2022.--Ordered to be printed
               
               		       __________
               		       
               		       
               	    U.S. GOVERNMENT PUBLISHING OFFICE	       
               
039-010			    WASHINGTON : 2023               
                              
               
               
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                   GARY C. PETERS, Michigan, Chairman
THOMAS R. CARPER, Delaware           ROB PORTMAN, Ohio
MAGGIE HASSAN, New Hampshire         RON JOHNSON, Wisconsin
KYRSTEN SINEMA, Arizona              RAND PAUL, Kentucky
JACKY ROSEN, Nevada                  JAMES LANKFORD, Oklahoma
ALEX PADILLA, California             MITT ROMNEY, Utah
JON OSSOFF, Georgia                  RICK SCOTT, Florida
                                     JOSH HAWLEY, Missouri

                   David M. Weinberg, Staff Director
                    Zachary I. Schram, Chief Counsel
            Lena C. Chang, Director of Governmental Affairs
         Matthew T. Cornelius, Senior Professional Staff Member
                Pamela Thiessen, Minority Staff Director
            Sam J. Mulopulos, Minority Deputy Staff Director
                    Ryan L. Giles, Minority Counsel
                     Laura W. Kilbride, Chief Clerk


                                                      Calendar No. 672
117th Congress      }                           {         Report
                                SENATE
 2d Session         }                           {         117-273

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


 
                           SMART ACT OF 2021

                                _______
                                

               December 19, 2022.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 2801]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 2801) to amend 
title 5, United States Code, to improve the effectiveness of 
major rules in accomplishing their regulatory objectives by 
promoting retrospective review, and for other purposes, having 
considered the same, reports favorably thereon with an 
amendment, in the nature of a substitute, 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...............................................3

IV. Section-by-Section Analysis.......................................3
 V. Evaluation of Regulatory Impact...................................4
VI. Changes in Existing Law Made by the Bill, as Reported.............4

                         I. Purpose and Summary

    S. 2801, the Setting Manageable Analysis Requirements in 
Text Act of 2021 (SMART Act) requires agencies, when publishing 
a proposed or final major rule, to include a framework for 
assessing whether the rule achieves its regulatory objective. 
An agency must assess a rule in the time frame included in the 
framework. The assessment must compare the rule's anticipated 
and actual benefits and costs.
    The bill defines a major rule as a rule likely to cause (1) 
an annual effect on the economy of $100 million or more; (2) a 
major increase in costs or prices; or (3) significant adverse 
effects on competition, employment, investment, productivity, 
innovation, health, safety, the environment, or the ability of 
U.S.-based enterprises to compete with foreign-based 
enterprises.
    The SMART Act requires that all major rules incorporate, 
within their preamble, a framework for retrospectively 
reviewing whether the rule is effectively meeting its 
regulatory objective. The framework will include a clear 
statement of the regulatory objective, the methodology by which 
the agency will measure the regulation's effectiveness, a plan 
for gathering appropriate data, and a specific timeframe for 
the review, which is not to exceed 10 years. Using the data 
collected under the framework, the agency must determine 
whether the rule should remain in its current form, be 
expanded, streamlined or otherwise modified to accomplish the 
regulatory objective. Once an agency makes its determination, 
the agency will publish the details of the assessments online.

              II. Background and the Need for Legislation

    For more than four decades, Presidents have used Executive 
Orders to require agencies to assess their regulatory impacts 
before issuing proposed and final rules.\1\ Jimmy Carter was 
the first president to direct agencies to review existing 
regulations, and each subsequent president has issued their own 
similar review requirements.\2\ However, many of these review 
requirements were vague, and agencies have more often used them 
to justify existing regulations, rather than to inform or 
change those regulations.\3\ In some cases, agencies have 
failed to include required plans to assess the intended and 
actual impacts of their major rules. For example, in 2014, the 
Regulatory Studies Center at George Washington University 
(Center) found that none of the Obama Administration's major 
rules included their required plans for retrospective reviews 
to assess their impacts.\4\ As Center Director Susan Dudley 
noted in her testimony, it is unclear that this trend has 
changed since 2014.\5\
---------------------------------------------------------------------------
    \1\Senate Committee on Homeland Security and Governmental Affairs 
Regulatory Affairs and Financial Management Subcommittee, Testimony 
Submitted for the Record of Susan E. Dudley, Hearing on From Beginning 
to End: AN Examination of Agencies' Early Public Engagement and 
Retrospective Review, 116th Cong. (May 7, 2019) (S. Hrg. 116-37) 
(hereinafter ``Dudley Testimony'').
    \2\Government Accountability Office, Reexamining Regulations: 
Opportunities Exist to Improve Effectiveness and Transparency of 
Retrospective Reviews, at 10 (GAO-07-791) (July 2007); See Exec. Order 
No. 12033, 43 Fed. Reg. 1915 (Jan. 13, 1978).
    \3\Id.
    \4\George Washington University Regulatory Studies Center, 
Evaluating Retrospective Review of Regulations in 2014 (Nov. 5, 2015) 
(www.regulatorystudies.columbian.gwu.edu/evaluating-retrospective-
review-regulations-2014); See Exec. Order No. 13563, 76 Fed. Reg. 3821 
(Jan. 18, 2011).
    \5\Dudley Testimony at 6.
---------------------------------------------------------------------------
    Ex post review requirements for agencies to assess the 
impact of their major rules could help ensure that major rules 
accomplish their intended regulatory objectives. The SMART Act 
would help to do just that, by requiring agencies to 
proactively determine a framework and timeline to measure 
regulatory effectives of their most significant regulations.
    The bill would apply to major rules likely to cause an 
annual effect on the economy of $100 million or more. This 
qualification ensures that agencies create frameworks for the 
most influential rules and are not overburdened by reporting 
requirements for smaller, less economically significant 
regulations. According to the Center, which relies on records 
kept by the Government Accountability Office (GAO), agencies 
across government issued less than 50 major rules annually, on 
average, between 1981 and 2021.\6\ Even in 2020, which saw the 
highest number of major rules in almost four decades, less than 
140 of those rules across government qualified as `economically 
significant'. This Act codifies common sense retrospective 
analysis in agency rulemaking, ensuring transparency and 
accountability into agencies' most important rules and 
improving regulatory protections for the American public.
---------------------------------------------------------------------------
    \6\Economically Significant Final Rules Published by Presidential 
Year (https://regulatorystudies.columbian.gwu.edu/reg-stats) (accessed 
December 11, 2022).
---------------------------------------------------------------------------

                        III. Legislative History

    Senator Kyrsten Sinema (D-AZ) introduced S. 2801, the 
Setting Manageable Analysis Requirements in Text Act of 2021, 
on September 22, 2022, with Senator James Lankford (R-OK). The 
bill was referred to the Committee on Homeland Security and 
Governmental Affairs.
    The Committee considered S. 2801 at a business meeting on 
February 2, 2022. During the business meeting, a substitute 
amendment was offered by Senator Sinema and Senator Lankford 
and was adopted by voice vote en bloc. The substitute amendment 
gives agencies flexibility in developing their methodology for 
conducting the retrospective review assessments. In addition, 
it strengthens the protections against litigation if agencies 
choose to modify or reassess their methodology over the course 
of the rulemaking and its impacts. Finally, the substitute 
amendment updated the short title of the bill. The Sinema-
Lankford substitute amendment was ordered reported favorably by 
voice vote en bloc by the Sinema-Lankford Substitute Amendment. 
Senators Peters, Carper, Hassan, Sinema, Rosen, Padilla, 
Ossoff, Portman, Lankford, Scott, and Hawley were present. The 
bill, as amended, was ordered reported favorably by voice vote 
en bloc as amended by the Sinema-Lankford Substitute Amendment. 
Senators Peters, Carper, Hassan, Sinema, Rosen, Padilla, 
Ossoff, Portman, Lankford, Scott, and Hawley were present.
    Consistent with Committee Rule 11, the Committee reports 
the bill with a technical amendment by mutual agreement of the 
Chairman and Ranking Member.

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


Section 1. Short title

    This section establishes the short title of the bill as the 
`Setting Manageable Analysis Requirements in Text Act of 2022'' 
or the ``SMART Act of 2022''.

Sec. 2. Incorporating retrospective review into new major rules

    This section amends Subchapter II of chapter 5 of title 5 
in United States Code.
    Subsection (a) of Sec. 2 amends 5. U.S.C. 551, providing 
definitions for ``Administrator'' and ``major rule.''
    Subsection (f) of Sec. 2 amends 5. U.S.C. 553 by adding a 
``major rule frameworks'' provision. Subsection (f)(1) of Sec. 
2 directs agencies to include a potential framework for 
measuring the effectiveness of a rule when that rule meets the 
definition of a ``major rule.'' When publishing a final major 
rule in the Federal Register, an agency must publish a 
framework that includes (1) a statement of regulatory 
objective, (2) planning methodology to assess the outcomes of 
the rule, (3) a plan for gathering data that includes public 
input, and (4) and a timeline, no longer than 10 years, under 
which to assess the effectiveness of the rule.
    Subsection (f)(2) of Sec. 2 requires each agency to use the 
methodology outlined in their framework to assess whether (1) 
the major rule is accomplishing its objective, (2) the major 
rule has been rendered unnecessary, (3) the major rule needs to 
be expanded, streamlined, or modified, or (4) an alternative to 
the major could better achieve the regulatory objective. If an 
agency uses an alternative methodology, they should include a 
notification of the revised methodology.
    Subsection (f)(2)(D) of Sec. 2 requires agencies to publish 
the results of their assessment of the major rule to their 
websites within 180 days of completion. Subsection (f)(3) 
requires agency heads to oversee the timely publishing to their 
agencies' websites.
    Subsection (f)(4) of Sec. 2 requires the Administrator of 
the Office of Information and Regulatory Affairs (OIRA) of the 
Office of Management and Budget (OMB) to (1) issue guidance to 
agencies regarding compliance with the Act; (2) encourage and 
assist with streamlining and interagency coordination of 
assessments; (3) determine whether certain agencies may be 
exempt from with the Act for specific circumstance; and (4) 
extend the deadline to comply with the assessment by no more 
than 90 days for an agency that can justify its inability to 
meet the deadline put forth in its framework.
    Subsection (f)(5) and Subsection (f)(6) of Sec. 2 exempts 
agencies from compliance with this Act for a specific set of 
circumstances.
    Subsection (f)(7) of Sec. 2 specifies that judicial review 
is limited to the publication of the framework with the final 
major rule and the publication of the assessment or subsequent 
assessment. The standard for this subsection of 5 U.S.C. 553 is 
remand without vacatur. At such a time when an agency does not 
comply with the actions required under the subsection, the 
courts may remand the rule to the agency to comply with the 
Act. However, the major rule shall take, or remain in, effect 
notwithstanding any order issued by the court.

                   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 (UMRA) and would impose no costs 
on state, local, or tribal governments.

       VI. 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 
the bill, 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) `Administrator' means the Administrator of the 
        Office of Information and Regulatory Affairs of the 
        Office of Management and Budget established under 
        section 3503 of title 44 and any successor to that 
        office; and
          (16) `major rule' means any rule that the 
        Administrator finds has resulted in or is likely to 
        result in--
                  (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, or local government agencies, or 
                geographic regions; or
                  (C) significant adverse effects on 
                competition, employment, investment, 
                productivity, innovation, health, safety, the 
                environment, or the ability of United States-
                based enterprises to compete with foreign-based 
                enterprises in domestic and export markets.

           *       *       *       *       *       *       *


SEC. 553. RULE MAKING

    (a) * * *
    (b) * * *
    (c) * * *
    (d) * * *
    (e) * * *
    (f) Major Rule Frameworks.--
          (1) In general.--On and after the date that is 1 year 
        after the date of enactment of this subsection--
                  (A) with respect to a proposed rule published 
                by an agency in the Federal Register that the 
                agency reasonably expects would meet the 
                definition of a major rule, the agency shall 
                include a potential framework for assessing the 
                implemented rule, which shall include a general 
                statement of how the agency intends to measure 
                the effectiveness of the rule; and
                  (B) with respect to a final major rule 
                published by an agency in the Federal Register, 
                including a major rule that the agency did not 
                initially reasonably expect would meet the 
                definition of a major rule under subparagraph 
                (A), the agency shall include a framework for 
                assessing the major rule under paragraph (2), 
                which shall include--
                          (i) a statement of the regulatory 
                        objectives of the major rule, including 
                        a summary of the societal benefit and 
                        cost of the major rule;
                          (ii) the methodology by which the 
                        agency plans to analyze the qualitative 
                        and quantitative outcomes of the major 
                        rule so that the agency can assess--
                                  (I) the effectiveness and 
                                benefits of the major rule in 
                                producing the regulatory 
                                objectives of the major rule; 
                                and
                                  (II) the effects and costs of 
                                the major rule on regulated and 
                                other affected entities;
                          (iii) a plan for gathering data, 
                        including public input, regarding the 
                        methodology described in clause (ii) on 
                        an ongoing basis or at periodic times; 
                        and
                          (iv) a time frame, as appropriate to 
                        the major rule and not more than 10 
                        years after the effective date of the 
                        major rule, under which the agency 
                        shall conduct the assessment of the 
                        major rule in accordance with paragraph 
                        (2)(A).
          (2) Assessment.--
                  (A) In general.--Each agency shall assess the 
                data gathered under paragraph (1)(B)(iii), 
                using the methodology set forth in paragraph 
                (1)(B)(ii) or any other appropriate methodology 
                developed after the issuance of a final major 
                rule--
                          (i) to analyze how the actual 
                        benefits and costs of the major rule 
                        may have varied from those anticipated 
                        at the time the major rule was issued; 
                        and
                          (ii) to determine whether--
                                  (I) the major rule is 
                                accomplishing the regulatory 
                                objective of the major rule;
                                  (II) the major rule has been 
                                rendered unnecessary, taking 
                                into consideration--
                                          (aa) changes in the 
                                        subject area affected 
                                        by the major rule; and
                                          (bb) whether the 
                                        major rule overlaps, 
                                        duplicates, or 
                                        conflicts with other 
                                        rules or, to the extent 
                                        feasible, State and 
                                        local government 
                                        regulations;
                                  (III) the major rule needs to 
                                be expanded, streamlined, or 
                                otherwise modified in order to 
                                accomplish the regulatory 
                                objective of the major rule; 
                                and
                                  (IV) other alternatives to 
                                the major rule or a 
                                modification of the major rule 
                                could better achieve the 
                                regulatory objective of the 
                                major rule by increasing the 
                                benefits of the major rule or 
                                imposing a smaller burden on 
                                society, or both, taking into 
                                consideration any changes in 
                                the regulatory environment that 
                                may have made the major rule 
                                more or less necessary or 
                                effective, and any cost already 
                                incurred.
                  (B) Different methodology.--If an agency uses 
                a methodology other than the methodology set 
                forth in paragraph (1)(B)(ii) to assess data 
                under subparagraph (A), the agency shall 
                include notification of the revised methodology 
                and an explanation of the changes in 
                circumstances that necessitated the use of that 
                other methodology as part of the notice 
                required under subparagraph (D).
                  (C) Subsequent assessments.--If, after an 
                assessment of a major rule under subparagraph 
                (A), an agency determines that the major rule 
                will remain in effect with or without 
                modification, the agency shall, in consultation 
                with the Administrator, include with the 
                assessment produced under subparagraph (A) a 
                list of circumstances or events that would 
                necessitate a subsequent review in accordance 
                with subparagraph (A) to ensure that the major 
                rule continues to meet the regulatory objective 
                of the major rule.
                  (D) Publication.--Not later than 180 days 
                after the date on which an agency completes an 
                assessment of a major rule under subparagraph 
                (A), the agency shall publish prominently on 
                the website of the agency the results of the 
                assessment, including the circumstances or 
                events that would necessitate a subsequent 
                assessment of the major rule under subparagraph 
                (C).
          (3) Agency head responsibilities.--The head of each 
        agency shall--
                  (A) oversee the timely compliance of the 
                agency with this subsection; and
                  (B) ensure that the results of each 
                assessment conducted under paragraph (2) are 
                published promptly in accordance with paragraph 
                (2)(D).
          (4) Omb oversight.--The Administrator shall--
                  (A) issue guidance for agencies regarding the 
                development of the framework under paragraph 
                (1) and the conduct of the assessments under 
                paragraph (2)(A);
                  (B) encourage and assist agencies to 
                streamline and coordinate the assessment of 
                major rules with similar or related regulatory 
                objectives;
                  (C) exempt an agency from including the 
                framework required under paragraph (1)(B) when 
                publishing a final major rule, if--
                          (i) the agency did not issue a notice 
                        of proposed rule making for the major 
                        rule in order to provide a timely 
                        response to an emergency or comply with 
                        a statutorily imposed deadline, in 
                        accordance with paragraph (6)(B); or
                          (ii) the Administrator determines 
                        that--
                                  (I) the final major rule 
                                falls within a category of 
                                major rules that are routine or 
                                periodic in nature, including 
                                those issued on an annual basis 
                                in order to put in place annual 
                                spending programs; or
                                  (II) for any other reason, 
                                the conduct of an assessment 
                                would be impracticable, 
                                unnecessary, or contrary to the 
                                public interest; and
                  (D) extend the deadline specified by an 
                agency for an assessment of a major rule under 
                paragraph (1)(B)(iv) or paragraph (2)(C) for a 
                period of not more than 90 days if the agency 
                justifies why the agency is unable to complete 
                the assessment by that deadline.
          (5) Rule of construction.--Nothing in this subsection 
        may be construed to affect--
                  (A) the authority of an agency to assess or 
                modify a major rule of the agency earlier than 
                the end of the time frame specified for the 
                major rule under paragraph (1)(B)(iv); or
                  (B) any other provision of law that requires 
                an agency to conduct retrospective reviews of 
                rules issued by the agency.
          (6) Applicability.--
                  (A) In general.--This subsection shall not 
                apply to--
                          (i) a major rule of an agency--
                                  (I) that the Administrator 
                                reviewed before the date of 
                                enactment of this subsection;
                                  (II) for which the agency is 
                                required to conduct a 
                                retrospective review under--
                                          (aa) section 2222 of 
                                        the Economic Growth and 
                                        Regulatory Paperwork 
                                        Reduction Act of 1996 
                                        (12 U.S.C. 3311);
                                          (bb) section 170(d) 
                                        of the Financial 
                                        Stability Act of 2010 
                                        (12 U.S.C. 5370(d)); or
                                          (cc) any other 
                                        provision of law with 
                                        requirements that the 
                                        Administrator 
                                        determines--
                                                  (AA) include 
                                                robust public 
                                                participation;
                                                  (BB) include 
                                                significant 
                                                agency 
                                                consideration 
                                                and analysis of 
                                                whether the 
                                                rule is 
                                                achieving the 
                                                regulatory 
                                                objective of 
                                                the rule; and
                                                  (CC) meet, 
                                                are 
                                                substantially 
                                                similar to, or 
                                                exceed the 
                                                requirements of 
                                                this 
                                                subsection;
                                  (III) for which the 
                                authorizing statute of the rule 
                                is subject to periodic 
                                authorization by Congress not 
                                less frequently than once every 
                                10 years; or
                                  (IV) for which the 
                                authorizing statute of the rule 
                                requires the promulgation of a 
                                new or revised rule not less 
                                frequently than once every 10 
                                years; or
                          (ii) interpretative rules, general 
                        statements of policy, or rules of 
                        agency organization, procedure, or 
                        practice.
                  (B) Good cause exemption.--In the case of a 
                major rule for which the agency has not issued 
                a notice of proposed rule making, the agency 
                shall publish the framework required under 
                paragraph (1)(B) in the Federal Register not 
                later than 6 months after the date on which the 
                agency publishes the final major rule.
          (7) Judicial review.--
                  (A) In general.--Judicial review of agency 
                compliance with this subsection--
                          (i) shall be strictly limited to--
                                  (I) whether an agency 
                                published the framework for 
                                assessment of a major rule 
                                described in paragraph (1); or
                                  (II) whether an agency 
                                published the assessment or 
                                subsequent assessment of a 
                                major rule described in 
                                subparagraphs (A), (C), and (D) 
                                of paragraph (2); and
                          (ii) shall not include a substantive 
                        review of the framework, assessment, or 
                        action of an agency under this 
                        subsection.
                  (B) Remedy available.--In granting relief in 
                an action brought under subparagraph (A), a 
                court may only issue an order remanding the 
                major rule to the agency to comply with 
                paragraph (1) or subparagraph (A), (C), or (D) 
                of paragraph (2), as applicable.
                  (C) Effective date of major rule.--If, in an 
                action brought under subparagraph (A)(i), a 
                court determines that the agency did not 
                comply, the major rule shall take effect not 
                withstanding any order issued by the court.
                  (D) Administrator.--Any determination, 
                action, or inaction of the Administrator shall 
                not be subject to judicial review.

                                  [all]