Federal Rulemaking: Past Reviews and Emerging Trends Suggest
Issues That Merit Congressional Attention (01-NOV-05,
GAO-06-228T).
Federal regulation is one of the basic tools of government used
to implement public policy. Agencies publish thousands of
regulations each year to achieve goals such as ensuring that
workplaces, air travel, and food are safe; that the nation's air,
water, and land are not polluted; and that the appropriate amount
of taxes are collected. Because regulations affect so many
aspects of citizens' lives, it is crucial that rulemaking
procedures and practices be effective and transparent. GAO, at
the request of Congress, has prepared over 60 reports and
testimonies during the past decade that review aspects of federal
rulemaking procedures and practices. This testimony summarizes
some of the general findings and themes that have emerged from
GAO's body of work on federal regulatory processes and
procedures, including areas on which Congress might consider
taking legislative action or sponsoring further study. GAO's
prior reports and testimonies contain a variety of
recommendations to improve various aspects of rulemaking
procedures and practices.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-06-228T
ACCNO: A40777
TITLE: Federal Rulemaking: Past Reviews and Emerging Trends
Suggest Issues That Merit Congressional Attention
DATE: 11/01/2005
SUBJECT: Accountability
Congressional oversight
Federal regulations
Policy evaluation
Administrative procedures
Policies and procedures
Public policy
Transparency
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO Product. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
******************************************************************
GAO-06-228T
United States Government Accountability Office
GAO Testimony
Before the Subcommittee on Commercial and Administrative Law, Committee on
the Judiciary, House of Representatives
For Release on Delivery Expected at 10:00a.m. EST Tuesday, November 1,
2005
FEDERAL RULEMAKING
Past Reviews and Emerging Trends Suggest Issues That Merit Congressional
Attention
Statement of J. Christopher Mihm Managing Director, Strategic Issues
a
GAO-06-228T
[IMG]
November 1, 2005
FEDERAL RULEMAKING
Past Reviews and Emerging Trends Suggest Issues That Merit Congressional
Attention
What GAO Found
GAO's prior evaluations highlighted both benefits and weaknesses of
rulemaking procedures and practices in areas such as (1) regulatory
analysis and accountability requirements, (2) presidential and
congressional oversight of agency rulemaking, and (3) notice and comment
rulemaking procedures under the Administrative Procedure Act (APA).
GAO's reviews identified at least four overall benefits associated with
existing regulatory analysis and accountability requirements: encouraging
and facilitating greater public participation in rulemaking; improving the
transparency of the rulemaking process; increasing the attention directed
to rules; and increasing expectations regarding the analytical support for
proposed rules. On the other hand, GAO identified at least four recurring
reasons why such requirements have not been more effective: unclear key
terms and definitions; limited scope and coverage; uneven implementation
by agencies; and a predominant focus on just one part of the regulatory
process.
With regard to executive branch and congressional oversight of agencies'
rulemaking, GAO has noted that efforts to increase presidential influence
and authority over the regulatory process, through mechanisms such as the
Office of Management and Budget's reviews of agencies' rulemaking, have
become more significant over the years. However, mechanisms intended to
increase congressional influence, such as procedures for disapproval of
regulations under the Congressional Review Act, appear to have been less
able to influence changes in agencies' rules to date.
GAO's reviews of agencies' compliance with rulemaking requirements under
APA pointed out that agencies often did not published notices of proposed
rulemaking (to solicit public comments) before issuing final rules,
including some major rules with an impact of $100 million or more on the
economy. APA provides exceptions to notice and comment requirements for
"good cause" and other reasons, but GAO noted that agencies' explanations
for use of such exceptions were sometimes unclear. Also, several
analytical requirements for proposed rules do not apply if an agency does
not publish a proposed rule. However, some of the growth in final rules
without proposed rules appeared to reflect increased use of "direct final"
and "interim final" procedures intended for noncontroversial and expedited
rulemaking.
The findings and emerging issues reported in GAO's body of regulatory work
suggested four areas on which Congress might consider taking action or
studying further: (1) generally reexamining rulemaking structures and
processes, (2) addressing previously identified weaknesses of existing
statutory requirements, (3) promoting additional improvements in the
transparency of agencies' rulemaking actions, and (4) opening a broader
examination of how developments in information technology might affect the
notice and comment rulemaking process.
United States Government Accountability Office
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to contribute to your overview of
administrative law, process, and procedure, including issues associated
with federal rulemaking. In my statement today, I will summarize some of
the general findings and themes that have emerged from our body of work on
federal regulatory processes and procedures, including areas on which the
subcommittee might consider taking legislative action or sponsoring
further study.
In brief, our prior work identified important benefits of laws and
executive orders designed to enhance federal rulemaking, such as enhanced
transparency of the process. But we have also pointed out potential
weaknesses and impediments to realizing expected improvements in the
process, such as a lack of clarity in key terms and definitions associated
with some regulatory analysis and accountability requirements. In
addition, some trends and changes in the rulemaking environment that have
emerged over the years might merit closer congressional attention and
consideration of whether adjustments in federal rulemaking procedures and
practices are needed to keep pace.
Prior GAO Work Identified Benefits and Weaknesses of Rulemaking Procedures and
Practices
Federal regulation, like taxing and spending, is one of the basic tools of
government used to implement public policy. Agencies publish thousands of
regulations each year to achieve goals such as ensuring that workplaces,
air travel, and food are safe; that the nation's air, water, and land are
not polluted; and that the appropriate amounts of taxes are collected.
Because regulations affect so many aspects of citizens' lives, it is
crucial that rulemaking procedures and practices be effective and
transparent. Over the last decade, at the request of Congress, we have
prepared over 60 reports and testimonies reviewing crosscutting aspects of
those rulemaking procedures and practices.1
I would like to focus my remarks on topics or themes emerging from this
work that are most relevant to this subcommittee's oversight agenda. These
include: (1) regulatory analysis and accountability requirements, (2)
presidential and congressional oversight of agency rulemaking, and
1Attached to this statement are the highlights pages from some of those
reports and testimonies. We have also included a more extensive list of
related GAO products at the end of this statement.
(3) notice and comment rulemaking procedures under the Administrative
Procedure Act (APA).2
Regulatory Analysis and Accountability Requirements
Congress has frequently asked us to evaluate the effectiveness of
requirements that were initiated over the past 25 years to improve the
federal regulatory process. Among the goals of these requirements are
reducing regulatory burdens, requiring more rigorous regulatory analysis,
and enhancing oversight of agencies' rulemaking. We have paid repeated
attention to agencies' compliance with some of these requirements, such as
ones in the Paperwork Reduction Act (PRA),3 Regulatory Flexibility Act
(RFA),4 Unfunded Mandates Reform Act (UMRA),5 Congressional Review Act
(CRA),6 and Executive Order 12866 on regulatory planning and review.7
Our reviews identified at least four overall benefits associated with
existing regulatory analysis and accountability requirements:
o Encouraging and facilitating greater public participation in
rulemaking-Some initiatives have encouraged and facilitated greater public
participation and consultation in rulemaking. Opportunities for the public
to communicate with agencies by electronic means have expanded and
requirements imposed by some regulatory reform initiatives encouraged
additional consultation with the parties that might be affected by rules
under development by federal agencies.
o Improving the transparency of the rulemaking process-The initiatives
implemented over the past 25 years have helped to make the rulemaking
process more open by facilitating public access to information, providing
more information about the potential effects of rules and
2Pub. L. No. 404, 60 Stat. 237 (1946), codified in 1966 in scattered
sections of title 5, United States Code.
344 U.S.C. S:S: 3501-3520.
45 U.S.C. S:S: 601-612.
5Pub. L. No. 104-4, 109 Stat. 48 (1995), codified as amended in scattered
sections of title 2, United States Code.
65 U.S.C. S:S: 801-808.
7Exec. Order No. 12866, 58 Fed. Reg. 51,735 (Sept. 30, 1993).
available alternatives, and requiring more documentation and justification
of agencies' decisions. Although we have often recommended that more could
be done to increase transparency, we have also highlighted the valuable
contribution made when agencies had particularly clear and complete
documentation supporting their rulemaking.
o Increasing the attention directed to rules and rulemaking-Our reports
have pointed out that oversight of agencies' rulemaking from various
sources-including Congress, the administration, and GAO, among others-can
result in useful changes to rules. Furthermore, we noted that agencies'
awareness of this added scrutiny may provide an important indirect effect,
potentially leading to less costly, more effective rules.
o Increasing expectations regarding the analytical support for proposed
rules-The analytical requirements that have been added over the years have
raised the bar regarding the information and analysis needed to support
policy decisions underlying regulations. Such requirements have also
prompted agencies to provide more data on the expected benefits and costs
of their rules and encouraged the identification and consideration of
available alternatives.
On the other hand, we also identified at least four recurring reasons why
the requirements imposed by such initiatives have not been more effective:
o Lack of clarity and other weaknesses in key terms and definitions-
Unclear terms and definitions can affect the applicability and
effectiveness of certain requirements. For example, we have frequently
cited the need to clarify key terms in RFA. RFA's analytical requirements,
which are intended to help address concerns about the impact of rules on
small entities, do not apply if an agency head certifies that a rule will
not have a "significant economic impact on a substantial number of small
entities." However, RFA neither defines this key phrase nor places clear
responsibility on any party to define it consistently across the
government. Not surprisingly, we found that agencies' compliance with RFA
varied widely from one agency to another and agencies had different
interpretations of RFA's requirements. In another example, our review of
agencies' compliance with a requirement to adjust civil monetary penalties
for inflation under the Federal Civil
Penalties Inflation Adjustment Act (Inflation Adjustment Act),8 indicated
that both a lack of clarity and apparent shortcomings in some of the Act's
provisions appeared to have prevented agencies from keeping their
penalties in pace with inflation.9 Although we recommended changes to
address these shortcomings, to date Congress has not acted on our
recommendations.
o Limited scope and coverage of various requirements-Simply put, some
rulemaking requirements apply to few rules or require little new analysis
for the rules to which they apply. For example, we pointed out last year
that the relatively small number of rules identified as containing
mandates under UMRA could be attributed in part to the 14 different
exemptions, exclusions, and other restrictions on the identification of
regulatory mandates under the Act. We also observed unintended "domino"
effects of making certain requirements contingent on other requirements.
For example, some requirements only apply to rules for which an agency
published a notice of proposed rulemaking, but, as I will discuss later,
we found that agencies issue many final rules without associated proposed
rules. In addition, the requirement for "look back" reviews of existing
regulations under section 610 of RFA only applies if the agency determined
that its rule would have a significant economic impact on a substantial
number of small entities. When RFA was amended in 1996 by the Small
Business Regulatory Enforcement Fairness Act (SBREFA)10 to require
additional actions, such as preparing compliance guides and convening
advocacy review panels for certain rules, this appeared to prompt a
reduction in the number of rules that the Environmental Protection Agency
identified as affecting small entities (and would therefore trigger the
new requirements).
o Uneven implementation of the initiatives' requirements-Sometimes,
agencies' implementation of various requirements serves to limit their
effectiveness. For example, a recurring message in our reports over the
828 U.S.C. S: 2461 note.
9GAO, Civil Penalties: Agencies Unable to Fully Adjust Penalties for
Inflation Under Current Law, GAO-03-409 (Washington, D.C.: Mar. 14, 2003).
We also addressed issues regarding civil penalties in GAO, Tax
Administration: Systematic Information Sharing Would Help IRS Determine
the Deductibility of Civil Settlement Payments, GAO-05-747 (Washington,
D.C.: Sept. 15, 2005).
105 U.S.C. S: 601 note.
years is that some agencies' economic analyses need improvement. Our
reviews have found that economic assessments that analyze regulations
prospectively are often incomplete and inconsistent with general economic
principles.11 Moreover, the assessments are not always useful for
comparisons across the government, because they are often based on
different assumptions for the same key economic variables.12 In our recent
report on UMRA, we noted that parties from various sectors expressed
concerns about the accuracy and completeness of agencies' cost estimates,
and some also emphasized that more needed to be done to address the
benefits side of the equation.13 Our reviews have found that not all
benefits are quantified and monetized by agencies, partly because of the
difficulty in estimation. In our recent report on the Paperwork Reduction
Act, we noted that the Act requires chief information officers (CIO) to
review and certify information collections to help minimize collection
burdens, but our analysis of case studies showed that CIOs provided these
certifications despite often missing or inadequate support from the
program offices sponsoring the collections.14
o A predominant focus on just one part of the regulatory process-More
analytical and procedural requirements have focused on agencies'
development of rules than on other phases of the regulatory process, from
the underlying statutory authorization, through effective implementation
and monitoring of compliance with regulations, to the evaluation and
revision of existing rules. While rulemaking is clearly an important point
in the regulatory process, these other phases also help determine the
effectiveness of federal regulation.
11See GAO, Regulatory Reform: Agencies Could Improve Development,
Documentation, and Clarity of Regulatory Economic Analyses,
GAO/RCED-98-142 (Washington, D.C.: May 26, 1998), and Clean Air Act:
Observations on EPA's Cost-Benefit Analysis of Its Mercury Control
Options, GAO-05-252 (Washington, D.C.: Feb. 28, 2005).
12See also GAO, Economic Performance: Highlights of a Workshop on Economic
Performance Measures, GAO-05-796SP (Washington, D.C.: July 2005).
13GAO, Unfunded Mandates: Views Vary About Reform Act's Strengths,
Weaknesses, and Options for Improvement, GAO-05-454 (Washington, D.C.:
Mar. 31, 2005).
14GAO, Paperwork Reduction Act: New Approach May Be Needed to Reduce
Government Burden on Public, GAO-05-424 (Washington, D.C.: May 20, 2005).
Oversight of Agency Rulemaking
Closely related to regulatory analysis and accountability requirements are
efforts to enhance the oversight of agencies' rulemaking by Congress, the
President, and the judiciary. In general, efforts to increase presidential
influence and authority over the regulatory process, primarily through the
mechanism of Office of Management and Budget (OMB) review of agencies'
rulemaking, have become more significant and widely used over the years.
However, our reviews suggest that mechanisms to increase congressional
influence, such as procedures for Congress to disapprove proposed rules,
appear to have been less able to influence changes in agencies' rules to
date. We have not done work that directly addresses issues regarding
judicial review of agencies' rulemaking.
In our September 2003 report on OMB's role in reviews of agencies' rules,
we recounted the history of centralized review of agencies' regulations
within the Executive Office of the President.15 We noted the expansion of
OMB's role in the rulemaking process over the past 30 years under various
executive orders. Although not without controversy, this expansion of a
centralized regulatory review function has become well established. OMB's
role in the rulemaking process has been further enhanced by provisions in
various statutes (such as the Information Quality Act,16 PRA, and UMRA)
that placed additional oversight responsibilities on OMB. The formal
process by which OMB currently reviews agencies' proposed and final rules
has essentially remained unchanged since Executive Order 12866 was issued
in 1993, but we reported on several changes in OMB policies in recent
years that affected the process, such as increased emphasis on economic
analysis, stricter adherence to the 90-day time limit for reviews of
agencies' draft rules, and improvements in the transparency of the OMB
review process (although some elements of the transparency of that process
are still unclear). Based on our review of OMB and agency dockets on 85
rules reviewed by OMB during a 1-year period, we also showed that OMB's
reviews sometimes result in significant changes to agencies' draft rules.
15GAO, Rulemaking: OMB's Role in Reviews of Agencies' Draft Rules and the
Transparency of Those Reviews, GAO-03-929 (Washington, D.C.: Sept. 22,
2003).
16The Information Quality Act is also known as the Data Quality Act.
Consolidated Appropriations-Fiscal Year 2001, Pub. L. No. 106-554, S: 515,
114 Stat. 2763A to 2763A-154 (2001).
The Congressional Review Act was enacted as part of SBREFA in 1996 to
better ensure that Congress has an opportunity to review, and possibly
reject, rules before they become effective. CRA established expedited
procedures by which members of Congress may disapprove agencies' rules by
introducing a resolution of disapproval that, if adopted by both Houses of
Congress and signed by the President, can nullify an agency's rule.
However, this disapproval process has only been used once, in 2001, when
Congress disapproved the Department of Labor's rule on ergonomics.17 CRA
also requires agencies to file final rules with both Congress and GAO
before the rules can become effective. Our role under CRA is to provide
Congress with a report on each major rule (for example, those with a $100
million impact on the economy) that includes GAO's assessment of the
issuing agency's compliance with the procedural steps required by various
acts and executive orders governing the rulemaking process. Although we
reported that agencies' compliance with CRA requirements was inconsistent
during the first years after its enactment, compliance improved.18
Congress also passed the Truth in Regulating Act19 (TIRA) in 2000 to
provide a mechanism for it to obtain more information about certain rules.
TIRA contemplated a 3-year pilot project during which GAO would perform
independent evaluations of "economically significant" agency rules when
requested by a chairman or ranking member of a committee of jurisdiction
of either House of Congress. However, during the 3-year period
contemplated for the pilot project, Congress did not enact any specific
appropriation to cover TIRA evaluations, as called for in the Act, and the
authority for the 3-year pilot project expired on January 15, 2004.
Therefore, we have no information on the potential effectiveness of this
mechanism.
17Pub. L. No. 107-5, 115 Stat. 7 (Mar. 20, 2001).
18As noted in GAO-04-637, our Office of General Counsel also takes several
steps to assure the completeness of the list of major rules identified in
GAO's compilation of reports on major rules. GAO's Federal Rules Database
is publicly available at www.gao.gov under Legal Products.
19Pub. L. No. 106-312, 114 Stat. 1248 (Oct. 17, 2000), 5 U.S.C. S: 801
note.
Rulemaking Procedures under the Administrative Procedure Act
Some of our reviews have touched on agencies' compliance with APA. APA
established the most long-standing and broadly applicable federal
requirements for informal rulemaking, also known as notice and comment
rulemaking.20 Among other things, APA generally requires that agencies
publish a notice of proposed rulemaking (NPRM) in the Federal Register.21
After giving interested persons an opportunity to comment on the proposed
rule, and after considering the public comments, the agency may then
publish the final rule. However, APA provides exceptions to these
requirements, including cases when, for "good cause," an agency finds that
notice and comment procedures are "impracticable, unnecessary, or contrary
to the public interest," and interpretive rules.22 When agencies use the
"good cause" exception, APA requires that they explicitly say so and
provide a rationale for the exception's use when the rule is published in
the Federal Register. An agency's claim of an exception to notice and
comment procedures is subject to judicial review. The legislative history
of APA, and associated case law, generally reinforce the view that the
"good cause" exception should be narrowly construed. In addition, the
Administrative Conference of the United States (ACUS) encouraged agencies
to use notice and comment procedures where not strictly required by APA
and recommended that Congress eliminate or narrow several of the
exceptions in APA.
In various reports over the years, we noted that agencies had not issued
NPRMs before publishing certain final rules.23 When we reported on this
issue in 1998, we estimated that about half of all final actions published
in 1997 had been issued without an associated NPRM.24 Although many of
those final actions without proposed rules were minor actions, 11 of the
61
205 U.S.C. S: 553.
21APA includes exceptions to notice and comment procedures for categories
of rules such as those dealing with military or foreign affairs and also
agency management and personnel. 5 U.S.C. S: 553(a).
225 U.S.C. S: 553(b).
23An earlier study concluded that NPRMs were not published for about
one-third of final regulatory actions published in the Federal Register.
See Juan J. Lavilla, The Good Cause Exemption to Notice and Comment
Rulemaking Requirements Under the Administrative Procedure Act, 3 Admin.
L. J. 317 (1989).
24GAO, Federal Rulemaking: Agencies Often Published Final Actions Without
Proposed Rules, GAO/GGD-98-126 (Washington, D.C.: Aug. 31, 1998).
major rules (for example, those with an impact of $100 million or more)
did not have NPRMs.25 While we have not studied this issue in depth since
1998, we continued to find the prevalence of final rules without proposed
rules during our reviews. For example, during our review of the
identification of federal mandates under UMRA in 2001 and 2002, we found
that 28 of the 65 major rules that imposed new requirements on nonfederal
parties did not have NPRMs.26
We have also reported that agencies' explanations for use of APA's "good
cause" exception were sometimes unclear, for example, simply stating that
notice and comment would delay rules that were, in some general way, in
the public interest. We noted that, when agencies publish final rules
without NPRMs, the public's ability to participate in the rulemaking
process is limited. Also, several regulatory reform requirements that
Congress has enacted during the past 25 years-such as RFA's and UMRA's
analytical requirements-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.
At the same time, the number of final rules without proposed rules appears
to reflect, at least in part, agencies' acceptance of procedures for
noncontroversial and expedited rulemaking actions known as "direct final"
and "interim final" rulemaking that were previously recommended by ACUS.27
Although we observed some differences in how agencies implement direct
final rulemaking, it generally involves publication of a rule 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 (such as 30
days). For example, the Federal Aviation Administration (FAA) has used
direct final rulemaking procedures nearly 40 times this year to modify the
legal descriptions of controlled airspace at various airports across the
country. FAA issued these modifications as direct final rules
25Of the 122 major rules submitted to GAO during the first 2 years of the
Congressional Review Act (April 1996 through March 1998), 23 were issued
without a previous NPRM. See GAO, Regulatory Reform: Major Rules Submitted
for Congressional Review During the First 2 Years, GAO/GGD-98-102R
(Washington, D.C.: Apr. 24, 1998).
26GAO, Unfunded Mandates: Analysis of Reform Act Coverage, GAO-04-637
(Washington, D.C.: May 12, 2004).
27See recommendation 95-4, 60 Fed. Reg. 43108 (Aug. 18, 1995). In 1993,
the National Performance Review also encouraged agencies to use direct
final rulemaking for noncontroversial rules.
because it anticipated no adverse or negative comments. FAA also noted
that these regulations only involve an established body of technical
regulations for which frequent and routine amendments are necessary to
keep them operationally current. If an adverse comment is received on a
direct final rule, the agency withdraws the direct final rule and may
publish the rule as a proposed rule under normal notice and comment
procedures. For interim rulemaking, an agency issues a final rule without
an NPRM that is generally effective immediately, but with a
postpromulgation opportunity for the public to comment. Public comments
may persuade the agency to later revise the interim rule. Although neither
direct nor interim final rulemaking are specifically mentioned in APA,
both may be viewed as an application of the "good cause" exception in APA.
Direct and interim final rules appear to account for hundreds of the final
regulatory actions published each year. In our report on final rules
without proposed rules, we identified 718 interim and direct final
regulatory actions published by agencies during 1997. A quick search of
recent Federal Register notices showed that agencies published over 550
notices in 2004 for which the subject rulemaking action was identified as
a direct final, interim final, or interim rule. Through October 21 of this
year, agencies had published nearly 400 such notices. Direct final rules
accounted for almost 60 percent of these notices.
Some Issues and Emerging Trends Merit Attention
The findings and emerging issues reported in our body of work on federal
rulemaking suggest a few areas on which the subcommittee might consider
taking legislative action or sponsor further study:
o generally reexamine rulemaking structures and processes, including the
APA;
o address previously identified weaknesses of existing statutory
requirements;
o promote additional improvements in the transparency of agencies'
rulemaking actions; and
o open a broader examination of how developments in information
technology might affect the notice and comment rulemaking process.
Generally Reexamine Rulemaking Structures and Processes, Including the APA
As we have noted in several products this year, we believe that it is
appropriate and necessary to begin taking a broad reexamination of what
the federal government does and how it does it, especially given the
fiscal challenges facing the country.28 Although the federal rulemaking
process does not have much direct impact on the federal budget-given that
most costs of regulation fall on regulated parties and their customers or
clients- we have testified that it nevertheless should be part of that
reexamination. We recognize that a successful reexamination of the base of
the federal government will entail multiple approaches over a period of
years. No single approach or reform can address all of the questions and
program areas that need to be revisited. However, as we have previously
stated, federal regulation is a critical tool of government, and
regulatory programs play a key part in how the federal government
addresses many of the country's needs. This subcommittee has already begun
such a reexamination through its current oversight agenda, and ACUS, if
funded, might well play a valuable role in carrying out the detailed
research that will be needed.
One emerging trend that any such reexamination should take into account is
the evolution of the markets and industries that federal agencies
regulate. Changes in the regulatory environment, especially the growing
influence of the global economy, have implications for federal rulemaking
procedures and practices. For example, agency officials pointed out to us
in 1999 the growing importance of international standards and
standardsetting bodies, alongside the role of international agreements, in
producing certification standards of interest and importance to American
businesses. More recently, international developments regarding global
harmonization of regulatory standards, chemical risk-assessment
requirements, Internet governance issues, and compliance with capital
standards and requirements for financial institutions have attracted
attention in the regulatory arena.
More specifically, Congress might want to revisit APA in view of changes
in agencies' practices over time, such as greater use of interim and
direct final
28See GAO, 21st Century Challenges: Reexamining the Base of the Federal
Government, GAO-05-325SP (Washington, D.C.: Feb. 2005); 21st Century
Challenges: Transforming Government to Meet Current and Emerging
Challenges, GAO-05-830T (Washington, D.C.: July 13, 2005); and Regulatory
Reform: Prior Reviews of Federal Regulatory Process Initiatives Reveal
Opportunities for Improvements, GAO-05-939T (Washington, D.C.: July 27,
2005).
rulemaking for certain regulations. For example, we observed that some
agencies differed in their policies and practices regarding direct final
rulemaking. Whether there should be one standard approach to such
rulemaking by federal agencies is an open question. In addition, although
direct final rulemaking had been viewed by ACUS as permissible under the
APA, ACUS nevertheless suggested that Congress may wish to expressly
authorize the process to alleviate any uncertainty and reduce the
potential for litigation. With regard to interim final rulemaking, ACUS
had similarly recommended that, when APA is reviewed, Congress amend the
Act to mandate use of postpromulgation comment procedures for rules issued
under the "good cause" exception.
Address Previously Identified Weaknesses of Existing Statutory
Requirements
Our prior reviews have identified many opportunities to revisit and refine
existing regulatory requirements. Although progress has been made to
implement recommendations we raised in past reports, there are still
unresolved issues. We still believe, for example, that the promise of RFA
may never be realized until key terms and definitions, such as
"substantial number of small entities," are clarified and/or an entity
with the authority and responsibility to do so is established. Similarly,
we believe that civil penalties are an important element of regulatory
enforcement and deterrence, but we found that agencies are unable to fully
adjust their penalties for inflation under the provisions of current law.
Congressional action is needed to address these issues.
Promote Additional Improvements in the Transparency of Agencies'
Rulemaking Actions
As pointed out earlier, we have identified many positive developments
regarding the transparency of the regulatory process, but more could be
done. For example, additional attention could be paid to agencies'
explanations for statements or certifications that certain requirements do
not apply. This is another area that might merit additional study of
available options. Some uses of exemptions, such as agencies' claims that
a rule does not contain a federal mandate as defined by UMRA or that a
proposed rule has no federalism impacts, do not require the agency to
provide any more support than the certification itself. Other uses, such
as claims of "good cause" to publish final rules without proposed rules,
require agencies to provide a clear statement and explanation (although
even here we noted that sometimes agencies' explanations were vague). This
raises the question of whether there should be a more demanding
requirement for agencies to essentially "show their work" behind such
certifications, and, if so, what form such requirements might take.
Open a Broader Examination of How Developments in Information Technology
Might Affect the Rulemaking Process
One emerging trend we have observed in our work is the expanded role of
technology-based innovations in enhancing the regulatory process.
Agencies' use of the Internet and other technologies to enhance the
regulatory process has rapidly increased in importance. In about 5 years,
we have gone from reporting on and encouraging the early development of
some innovative technologies in support of rulemaking to reporting on the
implementation of governmentwide e-government initiatives, such as
Regulations.gov and the centralized electronic docket for executive branch
agencies.29 The increased use of technology-based innovations may provide
opportunities to transform the rulemaking process, not simply to replace
"paper" processes with electronic versions. Continued study is therefore
warranted of how such initiatives can open additional opportunities for
public participation in and access to information about federal
rulemaking, as well as how information technology can be used to improve
the federal government's ability to analyze public comments.
Mr. Chairman, this concludes my prepared statement. Once again, I
appreciate the opportunity to testify on these important issues. I would
be pleased to address any questions you or other members of the committee
might have at this time.
If additional information is needed regarding this testimony, please
contact J. Christopher Mihm, Managing Director, Strategic Issues, at (202)
512-6806 or [email protected].
29See GAO, Federal Rulemaking: Agencies' Use of Information Technology to
Facilitate Public Participation, GAO/GGD-00-135R (Washington, D.C.: June
30, 2000); Electronic Government: Government Paperwork Elimination Act
Presents Challenges for Agencies, GAO/AIMD-00-282 (Washington, D.C.: Sept.
15, 2000); Regulatory Management: Communication About Technology-Based
Innovations Can Be Improved, GAO-01-232 (Washington, D.C.: Feb. 12, 2001);
Electronic Rulemaking: Efforts to Facilitate Public Participation Can Be
Improved, GAO-03-901 (Washington, D.C.: Sept. 17, 2003); and Electronic
Rulemaking: Progress Made in Developing Centralized E-Rulemaking System,
GAO-05-777 (Washington, D.C.: Sept. 9, 2005).
Related GAO Products
Electronic Rulemaking: Progress Made in Developing Centralized
E-Rulemaking System. GAO-05-777. Washington, D.C.: September 9, 2005.
Regulatory Reform: Prior Reviews of Federal Regulatory Process Initiatives
Reveal Opportunities for Improvements. GAO-05-939T. Washington, D.C.: July
27, 2005.
Economic Performance: Highlights of a Workshop on Economic Performance
Measures. GAO-05-796SP. Washington, D.C.: July 2005.
Paperwork Reduction Act: New Approach May Be Needed to Reduce Government
Burden on Public. GAO-05-424. Washington, D.C.: May 20, 2005.
Unfunded Mandates: Views Vary About Reform Act's Strengths, Weaknesses,
and Options for Improvement. GAO-05-454. Washington, D.C.: March 31, 2005.
21st Century Challenges: Reexamining the Base of the Federal Government.
GAO-05-325SP. Washington, D.C.: February 2005.
Electronic Government: Federal Agencies Have Made Progress Implementing
the E-Government Act of 2002. GAO-05-12. Washington, D.C.: December 10,
2004.
Unfunded Mandates: Analysis of Reform Act Coverage. GAO-04-637.
Washington, D.C.: May 12, 2004.
Paperwork Reduction Act: Agencies' Paperwork Burden Estimates Due to
Federal Actions Continue to Increase. GAO-04-676T. Washington, D.C.: April
20, 2004.
Rulemaking: OMB's Role in Reviews of Agencies' Draft Rules and the
Transparency of Those Reviews. GAO-03-929. Washington, D.C.: September 22,
2003.
Electronic Rulemaking: Efforts to Facilitate Public Participation Can Be
Improved. GAO-03-901. Washington, D.C.: September 17, 2003.
Civil Penalties: Agencies Unable to Fully Adjust Penalties for Inflation
Under Current Law. GAO-03-409. Washington, D.C.: March 14, 2003.
Related GAO Products
Regulatory Flexibility Act: Clarification of Key Terms Still Needed.
GAO02-491T. Washington, D.C.: March 6, 2002.
Regulatory Reform: Compliance Guide Requirement Has Had Little Effect on
Agency Practices. GAO-02-172. Washington, D.C.: December 28, 2001.
Federal Rulemaking: Procedural and Analytical Requirements at OSHA and
Other Agencies. GAO-01-852T. Washington, D.C.: June 14, 2001.
Regulatory Flexibility Act: Key Terms Still Need to Be Clarified.
GAO-01669T. Washington, D.C.: April 24, 2001.
Regulatory Reform: Implementation of Selected Agencies' Civil Penalties
Relief Policies for Small Entities. GAO-01-280. Washington, D.C.: February
20, 2001.
Regulatory Management: Communication About Technology-Based Innovations
Can Be Improved. GAO-01-232. Washington, D.C.: February 12, 2001.
Regulatory Flexibility Act: Implementation in EPA Program Offices and
Proposed Lead Rule. GAO/GGD-00-193. Washington, D.C.: September 20, 2000.
Electronic Government: Government Paperwork Elimination Act Presents
Challenges for Agencies. GAO/AIMD-00-282. Washington, D.C.: September 15,
2000.
Regulatory Reform: Procedural and Analytical Requirements in Federal
Rulemaking. GAO/T-GGD/OGC-00-157. Washington, D.C.: June 8, 2000.
Certification Requirements: New Guidance Should Encourage Transparency in
Agency Decisionmaking. GAO/GGD-99-170. Washington, D.C.: September 24,
1999.
Federalism: Previous Initiatives Have Little Effect on Agency Rulemaking.
GAO/T-GGD-99-131. Washington, D.C.: June 30, 1999.
Regulatory Accounting: Analysis of OMB's Reports on the Costs and Benefits
of Federal Regulation. GAO/GGD-99-59. Washington, D.C.: April 20, 1999.
Related GAO Products
Regulatory Flexibility Act: Agencies' Interpretations of Review
Requirements Vary. GAO/GGD-99-55. Washington, D.C.: April 2, 1999.
Regulatory Burden: Some Agencies' Claims Regarding Lack of Rulemaking
Discretion Have Merit. GAO/GGD-99-20. Washington, D.C.: January 8, 1999.
Federal Rulemaking: Agencies Often Published Final Actions Without
Proposed Rules. GAO/GGD-98-126. Washington, D.C.: August 31, 1998.
Regulatory Management: Implementation of Selected OMB Responsibilities
Under the Paperwork Reduction Act. GAO/GGD-98-120. Washington, D.C.: July
9, 1998.
Regulatory Reform: Agencies Could Improve Development, Documentation, and
Clarity of Regulatory Economic Analyses. GAO/RCED-98-142. Washington,
D.C.: May 26, 1998.
Regulatory Reform: Implementation of Small Business Advocacy Review Panel
Requirements. GAO/GGD-98-36. Washington, D.C.: March 18, 1998.
Congressional Review Act: Implementation and Coordination.
GAO-T-OGC-98-38. Washington, D.C.: March 10, 1998.
Regulatory Reform: Agencies' Section 610 Review Notices Often Did Not Meet
Statutory Requirements. GAO/T-GGD-98-64. Washington, D.C.: February 12,
1998.
Unfunded Mandates: Reform Act Has Had Little Effect on Agencies'
Rulemaking Actions. GAO/GGD-98-30. Washington, D.C.: February 4, 1998.
Regulatory Reform: Changes Made to Agencies' Rules Are Not Always Clearly
Documented. GAO/GGD-98-31. Washington, D.C.: January 8, 1998.
Regulatory Reform: Agencies' Efforts to Eliminate and Revise Rules Yield
Mixed Results. GAO/GGD-98-3. Washington, D.C.: October 2, 1997.
Regulatory Reform: Implementation of the Regulatory Review Executive
Order. GAO-T-GGD-96-185. Washington, D.C.: September 25, 1996.
Regulatory Flexibility Act: Status of Agencies' Compliance. GAO/GGD-94105.
Washington, D.C.: April 27, 1994.
Appendix I
March 2003
CIVIL PENALTIES
Agencies Unable to Fully Adjust Penalties
Highlights of GAO-03-409, a report to the for Inflation Under Current Law
Senate Committee on Governmental
Affairs and the House Committee on Government Reform
Civil penalties are an important As of June 2002, 16 of 80 federal
agencies with civil penalties covered by the
element of regulatory enforcement, Inflation Adjustment Act had not made
the required initial adjustments to
allowing agencies to punish their penalties. Nineteen other agencies had
not made required subsequent
violators appropriately and to serve adjustments, and several other
agencies had made incorrect adjustments.
as a deterrent to future violations. The act does not give any agency the
authority to monitor compliance or to
In 1996, Congress enacted the
Inflation Adjustment Act to require provide guidance to agencies. More
important, several provisions of the act
agencies to adjust certain penalties have prevented some agencies from
fully adjusting their penalties for
for inflation. GAO assessed federal inflation. One provision limited the
agencies' first adjustments to 10 percent
agencies' compliance with the act of the penalty amounts, even if the
penalties were decades old and hundreds
and whether provisions in the act of percent behind inflation. The
resultant "inflation gap" can never be
have prevented agencies from corrected under the statute and grows with
each subsequent adjustment.
keeping their penalties in pace with (The figure below illustrates the
effect of the cap on one agency's $1,000
inflation. penalty set in 1958.) Also, the act's calculation and rounding
procedures
require agencies to lose a year of inflation each time they adjust their
penalties, and can prevent some agencies from making adjustments until
Congress may wish to consider inflation increases by 45 percent or more
(i.e., 15 years or more at recent amending the act to (1) require or rates
of inflation). Finally, the act exempts penalties under certain statutes
permit agencies to adjust their from its requirements entirely.
Consequently, more than 100 exempted penalties for lost inflation; (2)
penalties have declined in value by 50 percent or more since Congress last
make the calculation and rounding set them. procedures more consistent
with
changes in inflation; (3) permit Ten Percent Cap on Initial Penalty
Adjustments Resulted in Large Inflation Gaps agencies with exempt
penalties to
adjust them for inflation; and (4)
give some agency the responsibility
to monitor compliance and provide
guidance.
The Department of Justice, the Department of the Treasury, and the Office
of Management and Budget did not comment on the first three matters for
congressional consideration. The agencies suggested changes to the fourth
matter, but we did not make those changes.
www.gao.gov/cgi-bin/getrpt?GAO-03-409.
To view the full report, including the scope and methodology, click on the
link above. For more information, contact Victor Rezendes (202) 512-6806
or [email protected].
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.
GAO's Mission
Obtaining Copies of GAO Reports and Testimony
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting its
constitutional responsibilities and to help improve the performance and
accountability of the federal government for the American people. GAO
examines the use of public funds; evaluates federal programs and policies;
and provides analyses, recommendations, and other assistance to help
Congress make informed oversight, policy, and funding decisions. GAO's
commitment to good government is reflected in its core values of
accountability, integrity, and reliability.
The fastest and easiest way to obtain copies of GAO documents at no cost
is through GAO's Web site (www.gao.gov). Each weekday, GAO posts newly
released reports, testimony, and correspondence on its Web site. To have
GAO e-mail you a list of newly posted products every afternoon, go to
www.gao.gov and select "Subscribe to Updates."
Order by Mail or Phone ~The first copy of each printed report is free.
Additional copies are $2 each. A check or money order should be made out
to the Superintendent of Documents. GAO also accepts VISA and Mastercard.
Orders for 100 or more copies mailed to a single address are discounted 25
percent. Orders should be sent to:
U.S. Government Accountability Office 441 G Street NW, Room LM Washington,
D.C. 20548
To order by Phone: ~Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061
To Report Fraud, Contact:
Waste, and Abuse in Web site: www.gao.gov/fraudnet/fraudnet.htm
E-mail: [email protected] Programs Automated answering system: (800)
424-5454 or (202) 512-7470
Gloria Jarmon, Managing Director, [email protected] (202)
512-4400Congressional U.S. Government Accountability Office, 441 G Street
NW, Room 7125 Relations Washington, D.C. 20548
Public Affairs ~Paul Anderson, Managing Director, [email protected] (202)
512-4800 U.S. Government Accountability Office, 441 G Street NW, Room 7149
Washington, D.C. 20548
PRINTED ON RECYCLED PAPER
*** End of document. ***