Federal Rulemaking: Procedural and Analytical Requirements at
OSHA and Other Agencies (14-JUN-01, GAO-01-852T).
This testimony discusses the procedural and analytical rulemaking
requirements applicable to the Occupational Safety and Health
Administration (OHSA) and other federal regulatory agencies. GAO
found that the rulemaking requirements that have been placed on
OHSA and other agencies are voluminous and require a wide range
of procedural, consultative, and analytical actions on the part
of the agencies. Federal agencies sometimes take years to develop
final rules and the requirements are not as effective as expected
or as they could be. This lack of effectiveness can be traced to
how the requirements have been implemented and the requirements
themselves.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-01-852T
ACCNO: A01195
TITLE: Federal Rulemaking: Procedural and Analytical
Requirements at OSHA and Other Agencies
DATE: 06/14/2001
SUBJECT: Occupational health and safety programs
Public health legislation
Regulatory agencies
Safety regulation
******************************************************************
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GAO-01-852T
Testimony Before the Committee on Education and the Workforce, House of
Representatives
United States General Accounting Office
GAO For Release on Delivery Expected at 10 a. m., EDT Thursday June 14, 2001
FEDERAL RULEMAKING
Procedural and Analytical Requirements at OSHA and Other Agencies
Statement of Victor Rezendes, Managing Director, Strategic Issues
GAO- 01- 852T
Page 1 GAO- 01- 852T
I am pleased to be here today to discuss the procedural and analytical
rulemaking requirements applicable to the Occupational Safety and Health
Administration (OSHA) and, in many cases, other federal regulatory agencies.
The requirements are contained in a number of statutes and executive orders
governing the rulemaking process, and the scope of the requirements varies
dramatically. Various actors are involved in this process, including
Congress, the president, the Office of Management and Budget (OMB), and,
most recently, GAO.
First, I would like to identify and describe the major statutory rulemaking
requirements that apply to many, and in some cases all, federal agencies.
These requirements are contained in such statutes as the Administrative
Procedure Act, the Paperwork Reduction Act, the Regulatory Flexibility Act,
and the Unfunded Mandates Reform Act. Then I would like to identify and
describe some of the executive branch requirements that apply to the
rulemaking process, most notably Executive Order 12866 on regulatory
planning and review. As I mentioned previously, we have examined the
implementation of many of these statutory and executive branch rulemaking
requirements, and I will discuss the results of our reviews in the process
of listing the requirements. Finally, I will note a relatively recent
statute that involves the legislative branch in the rulemaking process.
In brief, the rulemaking requirements that have been placed on OSHA and
other agencies over the years are clearly voluminous and require a wide
range of procedural, consultative, and analytical actions on the part of the
agencies. It is also clear that federal agencies sometimes take years to
develop final rules. For example, last year, the National Advisory Committee
on Occupational Safety and Health noted that it takes OSHA an average of 10
years to develop and promulgate a health or safety standard. 1 Although we
have reported on many federal rulemaking requirements, we have not examined
the extent to which those requirements are responsible for the long time
frames that are sometimes required to develop and publish final rules. Our
reviews do, however, demonstrate that the requirements are frequently not as
effective as expected or as they could be. In some cases that lack of
effectiveness can be traced to how the requirements have been implemented by
the agencies. In other cases, though, the requirements themselves seem to be
the problem. Specifically,
1 National Advisory Committee on Occupational Safety and Health, Report and
Recommendations Related to OSHA?s Standards Development Process, June 6,
2000.
Page 2 GAO- 01- 852T
the requirements were written in such a way that they do not apply to many
rules, do not require substantial additional effort by the regulatory
agencies, or give the agencies broad discretion in how key terms could be
defined and, therefore, whether certain rulemaking actions are required.
Some of the statutory rulemaking requirements that Congress has enacted over
the years apply to all agencies, but some of the requirements are applicable
only to certain agencies. Some of these requirements have been in place for
more than 50 years, but most have been implemented within the past 20 years
or so.
The most long- standing and broadly applicable federal rulemaking
requirements are in the Administrative Procedure Act (APA) of 1946. The APA
provides for both formal and informal rulemaking. Formal rulemaking is used
in ratemaking proceedings and in certain other cases when rules are required
by statute to be made ?on the record? after an opportunity for a trial- type
agency hearing. Informal or ?notice and comment? rulemaking is used much
more frequently, and is the focus of my comments here today.
In informal rulemaking, the APA generally requires that agencies publish a
notice of proposed rulemaking (NPRM) in the Federal Register. 2 The notice
must contain (1) a statement of the time, place, and nature of public
rulemaking proceedings; (2) reference to the legal authority under which the
rule is proposed; and (3) either the terms or substance of the proposed rule
or a description of the subjects and issues involved. ?Interested persons?
must then be given an opportunity to comment on the proposed rule. The APA
does not specify the length of this comment period, but agencies commonly
allow at least 30 days. After considering the public comments, the agency
may then publish the final rule in the Federal Register. According to the
APA, a final rule cannot become effective until at least 30 days after its
publication unless (1) the rule grants or recognizes an exemption or
relieves a restriction, (2) the rule is an interpretative rule or statement
of policy, or (3) the agency determines that the rule should
2 Some agencies begin the rulemaking process by publishing an ?advance
notice of proposed rulemaking? or ANPR in which the agency notifies the
public that it is considering an area for rulemaking and often requests
comments on the appropriate scope or topics of the rule. The APA does not
require the use of ANPRs, but some other statutes require it for particular
types of rules. Statutory Rulemaking
Requirements Administrative Procedure Act
Page 3 GAO- 01- 852T
take effect sooner for good cause and publishes that determination with the
rule.
The APA also states that the notice and comment procedures generally do not
apply when an agency finds, for ?good cause,? that those procedures are
?impracticable, unnecessary, or contrary to the public interest.? 3 When
agencies use the good cause exception, the act requires that they explicitly
say so and provide a rationale for the exception?s use when the rule is
published in the Federal Register. Two procedures for noncontroversial and
expedited rulemaking actions have been developed that are essentially
applications of the good cause exception. ?Direct final? rulemaking involves
agency publication of a rule in the Federal Register with a statement that
the rule will be effective on a particular date unless an adverse comment is
received within a specified period of time (e. g., 30 days). If an adverse
comment is filed, the direct final rule is withdrawn and the agency may
publish the rule as a proposed rule. In ?interim final? rulemaking, the
agency issues a final rule without an NPRM that is generally effective
immediately, but with a post- promulgation opportunity for the public to
comment. If the public comments persuade the agency that changes are needed
in the interim final rule, the agency may revise the rule by publishing a
final rule reflecting those changes.
In August 1998, we reported that about half of the 4,658 final regulatory
actions published in the Federal Register during 1997 were issued without
NPRMs. 4 Although most of the final actions without NPRMs appeared to
involve administrative or technical issues with limited applicability, some
were significant actions, and 11 were ?economically significant? (e. g., had
at least a $100 million impact on the economy). Some of the explanations
that the agencies offered in the preambles to their rules for using the good
cause exception were not clear. For example, in several cases, the preambles
said that an NPRM was ?impracticable? because of statutory or other
deadlines that had already passed by the time the rules were issued. In
other cases, the agencies asserted in the preambles that notice and comment
would delay rules that were, in some general way, in the ?public
3 The APA also provides exceptions to the NPRM requirement for certain
categories of regulatory action (e. g., rules dealing with military or
foreign affairs). It also states that the notice and comment procedures do
not apply to interpretive rules; general statements of policy; or rules of
agency organization, procedure, or practice.
4 Federal Rulemaking: Agencies Often Published Final Actions Without
Proposed Rules
(GAO/ GGD- 98- 126, Aug. 31, 1998).
Page 4 GAO- 01- 852T
interest.? For example, in one such case, the agency said it was using the
good cause exception because the rule would ?facilitate tourist and business
travel to and from Slovenia,? and therefore delaying the rule to allow for
public comments ?would be contrary to the public interest.? In another case,
the agency said that soliciting public comments on the rule was ?contrary to
the public interest? because the rule authorized a ?new
and creative method of financing the development of public housing.? The APA
recognizes that NPRMS are not always practical, necessary, or in the public
interest. However, when agencies publish final rules without NPRMs, the
public?s ability to participate in the rulemaking process is limited. Also,
several of the regulatory reform requirements that Congress has enacted
during the past 20 years use as their trigger the publication of an NPRM.
Therefore, it is important that agencies clearly explain why notice and
comment procedures are not followed. We recommended in our report that OMB
notify executive departments and agencies that (1) their explanations in the
preambles to their rules should clearly explain why notice and comment was
impracticable, unnecessary, or not in the public interest, and (2) OMB
would, as part of its review of significant final rules, focus on those
explanations.
Another statutory requirement that is applicable to both independent and
non- independent regulatory agencies is the Paperwork Reduction Act (PRA),
which was originally enacted in 1980 but was amended and recodified in 1995.
The original PRA established the Office of Information and Regulatory
Affairs (OIRA) within OMB to provide central agency leadership and oversight
of governmentwide efforts to reduce unnecessary paperwork and improve the
management of information resources. Under the act, agencies must receive
OIRA approval for each information collection request before it is
implemented. The act generally defines a
?collection of information? as the obtaining or disclosure of facts or
opinions by or for an agency by 10 or more non- federal persons. Many
information collections, recordkeeping requirements, and third- party
disclosures are contained in or are authorized by regulations as monitoring
or enforcement tools, while others appear in separate written
questionnaires.
Under the PRA, agencies must generally provide the public with an
opportunity to comment on a proposed information collection by publishing a
60- day notice in the Federal Register. For each proposed collection of
information submitted to OIRA, the responsible agency must certify and
provide a record of support that the collection, among other Paperwork
Reduction Act
Page 5 GAO- 01- 852T
things, is necessary for the proper performance of the functions of the
agency, is not unnecessarily duplicative of other information, reduces
burden on the public to the extent practicable and appropriate, and is
written in plain and unambiguous terminology. The agency must also publish a
notice in the Federal Register stating that the agency has submitted the
proposed collection to OIRA and setting forth, among other things, (1) a
description of the need and proposed use of the information, (2) a
description of the likely respondents and their proposed frequency of
response, and (3) an estimate of the resultant burden.
For any proposed information collection that is not contained in a proposed
rule, OIRA must complete its review of an agency information collection
request within 60 days of the date that the proposed collection is
submitted. OIRA approvals can be for up to 3 years, but can be renewed by
resubmitting their information collection requests to OIRA. Agency
information collections that have not been approved by OIRA or for which
approvals have expired are considered violations of the PRA, and those
individuals and organizations subject to these collections? requirements
cannot be penalized for failing to provide the information requested.
The PRA also requires OIRA to set governmentwide and agency- specific burden
reduction goals. The act envisioned a 35- percent reduction in
governmentwide paperwork burden by the end of fiscal year 2000. However,
earlier this year we testified that governmentwide paperwork burden has gone
up, not down, since 1995. 5 Federal agencies often indicate that they cannot
reduce their paperwork burden because of existing and new statutory
requirements that they collect more information. Nevertheless, some agencies
do appear to be making progress. For example, the Department of Labor?s
paperwork estimate dropped from more than 266 million burden hours at the
end of fiscal year 1995 to about 182 million burden hours at the end of
fiscal year 2000- a 32 percent decrease.
The Regulatory Flexibility Act (RFA), enacted in 1980 in response to
concerns about the effect that federal regulations can have on small
entities, is another example of a broadly- based rulemaking requirement.
Under the RFA, independent and non- independent regulatory agencies
5 Paperwork Reduction Act: Burden Estimates Continue to Increase (GAO- 01-
648T, Apr. 24, 2001). Regulatory Flexibility Act
Page 6 GAO- 01- 852T
must prepare an initial regulatory flexibility analysis at the time proposed
rules are issued unless the head of the issuing agency determines that the
proposed rule would not have a ?significant economic impact upon a
substantial number of small entities.? 6 The regulatory flexibility analysis
must include a description of, among other things, (1) the reasons why the
regulatory action is being considered; (2) the small entities to which the
proposed rule will apply and, where feasible, an estimate of their number;
(3) the projected reporting, recordkeeping, and other compliance
requirements of the proposed rule, and (4) any significant alternatives to
the proposed rule that accomplish the statutory objectives and minimize any
significant economic impact on small entities. The RFA also requires
agencies to ensure that small entities have an opportunity to participate in
the rulemaking process, and requires the Chief Counsel of the Small Business
Administration?s (SBA) Office of Advocacy to monitor agencies? compliance
with the Act. Section 610 of the RFA requires agencies to review those rules
that have or will have a significant impact within 10 years of their
promulgation to determine whether they should be continued without change or
should be amended or rescinded to minimize their impact on small entities.
We have reported on the implementation of the RFA on several occasions in
the past, and a recurring theme in our reports is the varying interpretation
of the RFA?s requirements by federal agencies. For example, in 1991, we
reported that each of the four federal agencies that we reviewed had a
different interpretation of key RFA provisions. 7 The report pointed out
that the RFA provided neither a mechanism to enforce compliance with the act
nor guidance on implementing it. We recommended that Congress consider
amending the RFA to require that SBA develop criteria for whether and how
federal agencies should conduct RFA analyses.
In 1994 we examined the 12 SBA annual reports on agencies? RFA compliance
that had been issued since 1980. 8 The reports indicated that
6 The agency must prepare a final regulatory flexibility analysis at the
time the final rule is issued unless the agency head makes a determination
that the rule will not have a significant economic impact on a substantial
number of small entities.
7 Regulatory Flexibility Act: Inherent Weaknesses May Limit Its Usefulness
for Small Governments (GAO/ HRD- 91- 16, Jan. 11, 1991). 8 Regulatory
Flexibility Act: Status of Agencies? Compliance (GAO/ GGD- 94- 105, Apr. 27,
1994).
Page 7 GAO- 01- 852T
agencies? compliance with the RFA varied widely from one agency to another,
and that some agencies? compliance varied over time. We noted that the RFA
does not expressly authorize SBA to interpret key provisions of the statute,
and does not require SBA to develop criteria for agencies to follow in
reviewing their rules. As a result, different rulemaking agencies were
interpreting the statute differently. We said that if Congress wanted to
strengthen the implementation of the RFA it should consider amending the act
to provide SBA with clearer authority and responsibility to interpret the
RFA?s provisions and require SBA to develop criteria on whether and how
agencies should conduct RFA analyses.
We essentially repeated this recommendation in our 1999 report on the review
requirements in section 610 of the RFA that the agencies we reviewed
differed in their in their interpretation of those review requirements. 9 We
said that if Congress was concerned about these varying interpretations it
might wish to consider clarifying those provisions. Last year we reported on
the implementation of the RFA at EPA and concluded that, although the agency
had established a high threshold for what constitutes a significant economic
impact, the agency?s determinations were within the broad discretion that
the statute allowed. 10 We again said that Congress could take action to
clarify the act?s requirements and help prevent concerns about how agencies
are implementing the act. Earlier this year we testified on the need for
congressional action in this area, noting that the promise of the RFA may
never be realized until Congress or some other entity defines what a
?significant economic impact? and a
?substantial number of small entities mean in a rulemaking setting. 11 To
date, Congress has not acted on our recommendations.
The RFA was amended in 1996 by the Small Business Regulatory Enforcement
Fairness Act (SBREFA) to, among other things, make certain agency actions
under the act judicially reviewable. For example, a small entity that is
adversely affected or aggrieved by an agency?s determination that its final
rule would not have a significant impact on small entities
9 Regulatory Flexibility Act: Agencies? Interpretations of Review
Requirements Vary
(GAO/ GGD- 99- 55, Apr. 2, 1999). 10 Regulatory Flexibility Act:
Implementation in EPA Program Offices and Proposed Lead Rule (GAO/ GGD- 00-
193, Sept. 20, 2000). 11 Regulatory Flexibility Act: Key Terms Still Need to
Be Clarified (GAO- 01- 669T, Apr. 24, 2001). Small Business Regulatory
Enforcement Fairness Act
Page 8 GAO- 01- 852T
could generally seek judicial review of that determination within 1 year of
the date of the final agency action. In granting relief, a court may remand
the rule to the agency or defer enforcement against small entities. SBA?s
Office of Advocacy noted in a report marking the 20th anniversary of the RFA
that the addition of judicial review has been an incentive for agencies to
comply with the act?s requirements, and that small entities are not hesitant
to initiate court challenges in appropriate cases. 12
Another provision of SBREFA requires OSHA and the Environmental Protection
Agency (EPA) to convene advocacy review panels before publishing an initial
regulatory flexibility analysis. Specifically, the agency issuing the
regulation (OSHA or EPA) must notify the SBA Chief Counsel for Advocacy and
provide information on the draft rule?s potential impacts on small entities
and the type of small entities that might be affected. The Chief Counsel
then must identify representatives of affected small entities within 15 days
of the notification. SBREFA requires the panel to consist of full- time
federal employees from the rulemaking agency, OIRA, and SBA?s Chief Counsel
for Advocacy. During the advocacy review panel process, the panel must
collect the advice and recommendations of representatives of affected small
entities about the potential impact of the draft rule. SBREFA also states
that the panel must report on the comments received and on the panel?s
recommendations no later than 60 days after the panel is convened, and the
panel?s report must be made public as part of the rulemaking record.
In 1998 we reported on how the first five advocacy review panels were
implemented, including OSHA?s panel on occupational exposure to
tuberculosis. 13 Agency officials and small entity representatives generally
agreed that the panel process was worthwhile, providing valuable insights
and opportunities for participation in the rulemaking process. However, some
of the small entity representatives believed that the panels should be held
earlier in the process, that the materials provided to them and the amount
of time provided for their review could be improved, and that the agencies
should improve the means by which they obtain comments. We noted that the
trigger for the panel process is an agency?s initial determination that a
rule may have a significant economic impact on a
12 U. S. Small Business Administration, 20 Years of the Regulatory
Flexibility Act: Rulemaking in a Dynamic Economy (Washington, DC, 2000). 13
Regulatory Reform: Implementation of the Small Business Advocacy Review
Panel Requirements (GAO/ GGD- 98- 36, Mar. 18, 1998).
Page 9 GAO- 01- 852T
substantial number of small entities, and again recommended that Congress
give some entity clear authority and responsibility to interpret the RFA?s
provisions.
The Unfunded Mandates Reform Act of 1995 (UMRA) is an example of a statutory
requirement that appears to have had little substantive effect on agency
rulemaking. For example, title II of UMRA generally requires covered federal
agencies to prepare written statements containing specific information for
any rule for which a proposed rule was published that includes a federal
mandate that may result in the expenditure of $100 million or more in any 1
year by state, local, and tribal governments, in the aggregate, or by the
private sector. The statute defined a ?federal
mandate? as not including conditions imposed as part of a voluntary federal
program or as a condition of federal assistance.
We examined the implementation of title II of UMRA during its first 2 years
and concluded that it appeared to have only limited direct impact on
agencies? rulemaking actions. 14 Most of the economically significant rules
promulgated during that period were not subject to the act?s requirements
for a variety of reasons (e. g., no proposed rule, or the mandates were a
condition of federal assistance or part of a voluntary program). There were
only two rules without an UMRA written statement that we believed should
have had one (EPA?s proposed national ambient air quality standards for
ozone and particulate matter), but even in those rules we believed that the
agency had satisfied the substantive UMRA written statement requirements.
Also, title II contains exemptions that allowed agencies not to take certain
actions if they determined that they were duplicative or not ?reasonably
feasible.? The title also required agencies to take certain actions that
they already were required to take or had completed or that were already
under way.
Another crosscutting rulemaking requirement of note is the National
Environmental Policy Act of 1969 (NEPA). NEPA requires federal agencies to
include in every recommendation or report related to ?major Federal actions
significantly affecting the quality of the human environment? a detailed
statement on the environmental impact of the proposed action.
14 Unfunded Mandates: Reform Act Has Had Little Effect on Agencies?
Rulemaking Actions (GAO/ GGD- 98- 30, Feb. 4, 1998). Unfunded Mandates
Reform Act National Environmental Policy Act
Page 10 GAO- 01- 852T
According to the act and its implementing regulations developed by the
Council on Environmental Quality, the statement must delineate the direct,
indirect, and cumulative effects of the proposed action. 15 Agencies are
also required to include in the statement (1) any adverse environmental
effects that cannot be avoided should the proposal be implemented, (2)
alternatives to the proposed action, (3) the relationship between local
short- term uses of the environment and the maintenance and enhancement of
long- term productivity, and (4) any irreversible and irretrievable
commitments of resources that would be involved if the proposed action
should be implemented. Before developing any such environmental impact
statement, NEPA requires the responsible federal official to consult with
and obtain comments of any federal agency that has jurisdiction by law or
special expertise with respect to any environmental impact involved.
Agencies must make copies of the statement and the comments and views of
appropriate federal, state, and local agencies available to the president,
the Council on Environmental Quality, and to the public. The adequacy of an
agency?s environmental impact statement is subject to judicial review.
The crosscutting statutory requirements that I have just listed are by no
means the only statutory requirements that guide agency rulemaking.
Regulations generally start with an act of Congress and are the means by
which statutes are implemented and specific requirements are established.
The statutory basis for a regulation can vary in terms of its specificity,
from very broad grants of authority that state only the general intent of
the legislation to very specific requirements delineating exactly what
regulatory agencies should do and how they should do it. In 1999, we issued
a report that examined this issue of regulatory discretion, and we reported
that in many of the cases that we examined the statutes gave the agencies
little or no discretion in establishing regulatory requirements that
businesses viewed as burdensome. 16 For example, we concluded that the
Occupational Safety and Health Act gave OSHA no discretion in whether to
hold companies (rather than individual employees) responsible for health and
safety violations. Also, as other witnesses today will likely describe in
detail, OSHA also follows numerous procedural and consultative steps before
issuing a rule that may or may not be statutorily
15 The NEPA regulations are codified at 40 CFR Parts 1500- 1508. 16
Regulatory Burden: Some Agencies? Claims Regarding Lack of Rulemaking
Discretion Have Merit (GAO/ GGD- 99- 20, Jan. 8, 1999). Other Statutory
Requirements
Page 11 GAO- 01- 852T
driven. For example, interested parties who comment on proposed OSHA rules
may request a public hearing when none has been announced in the notice.
When such a hearing is requested, OSHA says it will schedule one, and will
publish in advance the time and place for it in the Federal Register.
Therefore, federal agencies must be aware of the statutory requirements
underlying their regulations, and must craft rules that are consistent with
those requirements.
Similarly, agency rulemaking is often significantly influenced by court
decisions interpreting statutory requirements, and OSHA rulemaking is a good
case in point. For example, in its 1980 ?Benzene? decision, the Supreme
Court ruled that, before promulgating new health standards, OSHA must
demonstrate that the particular chemical to be regulated poses a
?significant risk? under workplace conditions permitted by current
regulations. 17 The court also said that OSHA must demonstrate that the new
limit OSHA proposes will substantially reduce that risk. This decision
effectively requires OSHA to evaluate the risks associated with exposure to
a chemical and to determine that these risks are ?significant? before
issuing a standard. Other court decisions have required OSHA rulemaking to
demonstrate the technical and economic feasibility of its requirements. 18
During the past 20 years, each president has issued executive orders and/ or
presidential directives designed to guide the federal rulemaking process,
often with the goal of reducing regulatory burden. Although independent
regulatory agencies are generally not covered by these requirements, they
are often encouraged to follow them.
One of the most important of the current set of executive orders governing
the rulemaking process is Executive Order 12866, ?Regulatory Planning and
Review,? which was issued by President Clinton in September 1993. Under the
order, non- independent regulatory agencies are required to submit their
?significant? rules to OIRA before publishing them in the
Federal Register at both the proposed and final rulemaking stages. OIRA must
generally notify the agency of the results of its review of a proposed
17 Industrial Union Department v. American Petroleum Institute, 448 U. S.
607 (1980). 18 See, for example, American Textile Mfrs. Inst., Inc. v.
Donovan, 452 U. S. 490 (1981) and
United Steelworkers v. Marshall, 647 F. 2d 1189 (D. C. Cir. 1980), cert.
denied, 453 U. S. 913 (1981). Executive
Orders/ Presidential Directives
Regulatory Planning and Review
Page 12 GAO- 01- 852T
or final rule within 90 calendar days after the date the rule and related
analyses are submitted. 19 The agencies are required to submit the text of
the draft regulatory action and an assessment of the potential costs and
benefits of the action to OIRA. They are required to submit a detailed
economic analysis for any regulatory actions that are ?economically
significant? (e. g., have annual effects on the economy of $100 million or
more). 20 According to the executive order, the analyses should include an
assessment of the costs and benefits anticipated from the action as well as
the costs and benefits of ?potentially effective and reasonably feasible
alternatives to the planned regulation.? The order also states that, in
choosing among alternatives, an agency should select those approaches that
maximize net benefits and ?base its decisions on the best reasonably
obtainable scientific, technical, economic, and other information concerning
the need for, and consequences of, the intended regulation.?
In January 1996, OMB issued ?best practices? guidance on preparing
costbenefit analyses under the executive order. The guidance gives agencies
substantial flexibility regarding how the analyses should be prepared, but
also indicates that the analyses should contain certain basic elements and
should be ?transparent?- disclosing how the study was conducted, what
assumptions were used, and the implications of plausible alternative
assumptions.
At the request of Members of Congress, we have examined agencies? economic
analyses both in our reviews of selected federal rules issued by multiple
agencies and in the context of particular regulatory actions. In one of our
reviews, we reported that some of the 20 economic analyses from five
agencies that we reviewed did not incorporate all of the best practices set
forth in OMB?s guidance. 21 Five of the analyses did not discuss
alternatives to the proposed regulatory action, and, in many cases, it was
not clear why the agencies used certain assumptions. Also, five of the
analyses did not discuss uncertainty associated with the agencies? estimates
of benefits and/ or costs, and did not document the agencies? reasons for
not doing so. We recommended that OMB?s best practices
19 OIRA must complete its review within 45 days if it has previously
reviewed the rule and the facts and circumstances are substantially
unchanged. 20 Similar economic analysis requirements had previously been in
place under Executive Order 12291, issued by President Reagan in 1981. 21
Regulatory Reform: Agencies Could Improve Development, Documentation, and
Clarity of Regulatory Economic Analyses (GAO/ RCED- 98- 142, May 26, 1998).
Page 13 GAO- 01- 852T
guidance be amended to provide that economic analyses should (1) address all
of the best practices or state the agency?s reason for not doing so, (2)
contain an executive summary, and (3) undergo an appropriate level of
internal or external peer review by independent experts. To date, OMB has
not acted on our recommendations.
Executive Order 12866 also includes several other notable requirements. For
example, section 5 of the order requires agencies to periodically review
their existing significant regulations to determine whether they should be
modified or eliminated. In March 1995, President Clinton reemphasized this
requirement by directing each agency to conduct a page- by- page review of
all existing regulations. In June 1995, the President announced that 16,000
pages had been eliminated from the Code of Federal Regulations. We reported
on this review effort in October 1997, noting that the page elimination
totals that four agencies reported did not take into account pages that had
been added while the eliminations took place. 22 We also said that about 50
percent of the actions taken appeared to have no effect on the burden felt
by regulated entities, would have little effect, or could increase
regulatory burden.
Another part of the executive order requires agencies to prepare an agenda
of all regulations under development or review and a plan describing in
greater detail the most important regulatory actions that the agency expects
to issue in proposed or final form in the next fiscal year or thereafter.
The order also requires agencies to identify for the public in a complete,
clear, and simple manner the substantive changes that are made to rules
while under review at OIRA and, separately, the changes made at the
suggestion or recommendation of OIRA. In January 1998 we reported on the
implementation of this requirement, and concluded that the four agencies we
reviewed had complete documentation available to the public of these changes
for only about one- quarter of the 122 regulatory actions that we reviewed.
23 OSHA had complete documentation available for one of its three regulatory
actions, but the information was contained in files separate from the public
rulemaking docket to ensure that it did not become part of the official
rulemaking record and, therefore, subject to litigation.
22 Regulatory Reform: Agencies? Efforts to Eliminate and Revise Rules Yield
Mixed Results (GAO/ GGD- 98- 3, Oct. 2, 1997). 23 Regulatory Reform: Changes
Made to Agencies? Rules Are Not Always Clearly Documented (GAO/ GGD- 98- 31,
Jan. 8, 1998).
Page 14 GAO- 01- 852T
Executive Order 12612 on ?Federalism,? issued by President Reagan in 1987,
was similar to the RFA in that it gave federal agencies broad discretion to
determine the applicability of its requirements. The executive order
required the head of each federal agency to designate an official to be
responsible for determining which proposed policies (including regulations)
had ?sufficient federalism implications? to warrant preparation of a
federalism assessment. If the designated official determined that such an
assessment was required, it had to accompany any proposed or final rule
submitted to OMB for review.
We examined the preambles of more than 11,000 final rules that federal
agencies issued between April 1996 and December 1998 to determine how often
they mentioned the executive order and how often the agencies indicated that
they had prepared a federalism assessment. 24 Our work indicated that
Executive Order 12612 had relatively little visible effect on federal
agencies? rulemaking actions during this time frame. The preambles to only 5
of the more than 11,000 rules indicated that the agencies had conducted a
federalism assessment.
Most of these rules were technical or administrative in nature, but 117 were
economically significant rules. However, the agencies prepared a federalism
assessment for only one of these economically significant rules. The lack of
assessments for these rules is particularly surprising given that the
agencies had previously indicated that 37 of the rules would affect state
and local governments, and said that 21 of them would preempt state and
local laws in the event of a conflict.
Federal agencies had broad discretion under Executive Order 12612 to
determine whether a proposed policy has ?sufficient? federalism implications
to warrant the preparation of a federalism assessment. Some agencies have
clearly used that discretion to establish an extremely high threshold. For
example, in order for an EPA rule to require a federalism assessment, the
agency?s guidance said that the rule must, among other things, have an
?institutional? effect on the states (not just a financial effect), and
affect all or most of the states in a direct, causal manner. Under these
standards, an EPA regulation that has a substantial financial
24 Federalism: Previous Initiatives Have Had Little Effect on Agency
Rulemaking
(GAO/ T- GGD- 99- 31, June 30, 1999). Federalism Executive
Order
Page 15 GAO- 01- 852T
effect on all states, but does not affect the ?institutional? role of the
states, would not require a federalism assessment.
Executive Order 12612 was revoked by President Clinton?s Executive Order
13132 on ?Federalism,? which was issued August 4, 1999, and took effect on
November 2, 1999. Like the old executive order, the new order provides
agencies with substantial flexibility to determine which of their actions
have ?federalism implications? and, therefore, when they should prepare a
?federalism summary impact statement.?
Non- independent regulatory agencies are also covered by an array of other
executive orders and presidential directives or memoranda. These executive
requirements include:
Executive Order 13175, which requires consultation and coordination with
Indian tribal governments. Agencies submitting final rules to OIRA under
Executive Order 12866 must certify that this order?s requirements were
?met in a meaningful and timely manner.?
Executive Order 12988 on civil justice reform, which generally requires
agencies to review existing and new regulations to ensure that they comply
with specific requirements (e. g., ?eliminate drafting errors and ambiguity?
and ?provide a clear legal standard for affected conduct?) to improve
regulatory drafting in order to minimize litigation.
Executive Order 12630 on constitutionally protected property rights, which
says each agency ?shall be guided by? certain principles when formulating or
implementing policies that have ?takings? implications. For example, the
order says that private property should be taken only for
?real and substantial threats,? and ?be no greater than is necessary.?
Executive Order 12898 on environmental justice, which says (among other
things) that each agency must develop a strategy that identifies and
addresses disproportionately high and adverse human health or environmental
effects of its programs, policies, and activities on minority populations
and low income populations. It also says that agencies should identify rules
that should be revised to meet the objectives of the order.
Executive Order 13045 on protection of children from environmental health
risks and safety risks. The order says that for any substantive rulemaking
action that is likely to result in an economically significant rule that
concerns an environmental health risk or safety risk that may
disproportionately affect children, the agency must provide OIRA (1) an
evaluation of the environmental or safety effects on children and (2) an
explanation of why the planned regulation is preferable to other potentially
effective and reasonably feasible alternatives. Other Executive Orders
and Directives
Page 16 GAO- 01- 852T
Executive Order 12889 on the North American Free Trade Agreement, which
generally requires agencies subject to the APA to provide at least a 75- day
comment period for any ?proposed Federal technical regulation or any Federal
sanitary or phytosanitary measure of general application.?
Various presidential memoranda or directives. For example, a March 4,
1995, presidential memorandum directed agencies to, among other things,
focus their regulatory programs on results not process and expand their use
of negotiated rulemaking. A June 1, 1998, presidential directive required
agencies to use plain language in proposed and final rulemaking documents.
One statutory requirement that I did not mention previously but that can
clearly affect agency rulemaking is the Congressional Review Act (CRA),
which was included as part of SBREFA in 1996. Under the CRA, before a final
rule can become effective it must be filed with Congress and GAO. If OIRA
considers the rule to be ?major? (e. g., has a $100 million impact on the
economy), the agency must delay its effective date by 60 days after the date
of publication in the Federal Register or submission to Congress and GAO,
whichever is later. Within 60 legislative or session days, a Member of
Congress can introduce a resolution of disapproval that, if adopted by both
Houses and signed by the president, can nullify the agency?s rule.
GAO?s major role under CRA is to provide Congress with a report on each
major rule concerning GAO?s assessment of the issuing agency?s compliance
with the procedural steps required by the various acts and executive orders
governing the rulemaking process. Our report must be sent to the
congressional committees of jurisdiction within 15 calendar days, so our
review is limited to a description of the issuing agency?s rulemaking
actions. 25 We also collect basic information about the nonmajor rules that
agencies issue. Information about both major and nonmajor rules is available
on our web site (www. gao. gov). As of last
25 Last year, Congress gave GAO a new and more substantive regulatory
oversight responsibility through passage of the Truth in Regulating Act of
2000 (TIRA). Under TIRA, the chairman or ranking member of any committee of
jurisdiction can request an in- depth review of the agency?s estimate of a
proposed or final economically significant rule?s costs and benefits, an
analysis of the alternatives that the agency considered, and the agency?s
compliance with relevant procedural and analytical requirements. Federal
agencies are required to ?promptly cooperate? with GAO in carrying out the
act. However, TIRA established a 3- year pilot project that became effective
upon the specific annual appropriation of $5. 2 million (or the prorated
portion thereof). To date, Congress has not provided that appropriation.
Congressional Review
Act
Page 17 GAO- 01- 852T
week, GAO had received more than 22,000 rules since the CRA took effect in
March 1996, of which nearly 350 have been considered major under the act.
OSHA had issued only 28 rules since March 1996, of which 6 were major rules.
Although the CRA has only a modest direct impact on regulatory agencies?
rulemaking processes, Congress? use of the statute to disapprove rules may
have a decided indirect impact on how other rulemaking requirements are
implemented. To date, Congress has used its disapproval power only one time-
the disapproval of OSHA?s ergonomics standard earlier this year.
Mr. Chairman, this completes my prepared statement. I would be pleased to
answer any questions.
(450055)
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