Regulatory Flexibility Act: Agencies' Interpretations of Review
Requirements Vary (Letter Report, 04/02/99, GAO/GGD-99-55).

Pursuant to a congressional request, GAO updated its previous reports on
agencies' use of the Unified Agenda of Federal Regulatory and
Deregulatory Actions to publish final rule notices, focusing on: (1) how
many agencies had no Agenda entries that were characterized as
Regulatory Flexibility Act (RFA) of 1980, section 610 reviews, whether
agencies are interpreting the review requirements consistently, and why
certain agencies that appeared subject to the requirements had no
entries; (2) how many of the section 610 review entries in these Agendas
appeared to meet the notification requirements in subsection 610(c); (3)
if the section 610 review entries did not appear to meet the statutory
requirements, why certain agencies' entries were characterized as
section 610 reviews; and (4) whether any federal agencies had revised
their section 610 review plans.

GAO noted that: (1) the April 1998 and November 1998 editions of the
Unified Agenda each contained about 4,500 entries that were submitted by
61 federal departments, agencies, and commissions; (2) the April 1998
edition of the Agenda identified 22 entries from 7 agencies as section
610 reviews; (3) the November 1998 edition of the Agenda identified 31
entries from 8 agencies as section 610 reviews; (4) 6 of the more than
50 agencies with no section 610 review entries in either edition of the
Agenda indicated in these and 19 previous editions of the Agenda that
many of their regulatory actions would have a significant economic
impact on a substantial number of small entities (SEISNSE), thereby
indicating that the agencies may need to review these rules under
section 610; (5) officials in three of these agencies offered different
reasons why their agencies had no section 610 review entries in the
April or November editions of the Agenda; (6) however, GAO could not
determine with certainty whether any of the agencies without section 610
review entries in these editions of the Agenda should have had such
entries; (7) also, no data are readily available to identify such rules
and agencies differ in their interpretations of the section 610 review
requirements; (8) of the 22 entries in the April 1998 Unified Agenda
that were characterized as section 610 reviews, only 2 appeared to
satisfy all of the public notification requirements of subsection 610(c)
of the RFA; (9) of the 31 section 610 review entries in the November
1998 edition of the Agenda, only one appeared to satisfy all of the
requirements of subsection 610(c) of the RFA; (10) the entries
frequently indicated that the underlying rules would not have a SEISNSE
and that the rules had already been reviewed; (11) the Department of
Transportation (DOT) and the Environmental Protection Agency had the
most section 610 review entries in the April 1998 and November 1998
editions of the Unified Agenda; (12) many of their section 610 review
entries did not appear to meet the notice requirements of subsection
610(c) because they used the Section 610 Review notation to inform the
public about the results of previously conducted reviews, and because of
the way in which they interpreted certain entry elements in the Agenda;
(13) DOT said it would review all of its rules between 1998 and 2008 to
determine whether any rule published within the previous 10 years had a
SEISNSE; and (14) for any such rule, DOT said it would then determine
whether the impact of the rule could be lessened.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-99-55
     TITLE:  Regulatory Flexibility Act: Agencies' Interpretations of 
             Review Requirements Vary
      DATE:  04/02/99
   SUBJECT:  Government publications
             Government information dissemination
             Reporting requirements
             Federal regulations
             Regulatory agencies
             Statutory law
             Agency proceedings
             Small business
             Economic analysis
IDENTIFIER:  Unified Agenda of Federal Regulatory and Deregulatory 
             Actions
             
******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO report.  This text was extracted from a PDF file.        **
** Delineations within the text indicating chapter titles,      **
** headings, and bullets have not been preserved, and in some   **
** cases heading text has been incorrectly merged into          **
** body text in the adjacent column.  Graphic images have       **
** not been reproduced, but figure captions are included.       **
** Tables are included, but column deliniations have not been   **
** preserved.                                                   **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
** A printed copy of this report may be obtained from the GAO   **
** Document Distribution Center.  For further details, please   **
** send an e-mail message to:                                   **
**                                                              **
**                                            **
**                                                              **
** with the message 'info' in the body.                         **
******************************************************************
Microsoft Word - 15mg01!.PBF REGULATORY FLEXIBILITY ACT

Agencies' Interpretations of Review Requirements Vary

United States General Accounting Office

GAO Report to the Chairman Committee on Small Business

U. S. Senate


April 1999 

GAO/GGD-99-55

April 1999   GAO/GGD-99-55

United States General Accounting Office Washington, D. C. 20548

General Government Division

B-282127

Page 1 GAO/GGD-99-55 Regulatory Flexibility Act

GAO April 2, 1999 The Honorable Christopher S. Bond Chairman,
Committee on Small Business United States Senate

Dear Mr. Chairman: Section 610 of the Regulatory Flexibility Act
(RFA) of 1980 requires each federal agency to develop a plan for
the review of its existing rules that have or will have a
significant economic impact on a substantial number of small
entities (SEISNSE). 1 The purpose of the reviews is to determine
whether the rules should be continued without change or should be
amended or rescinded to minimize their impact on small entities.
Subsection 610( c) of the RFA requires agencies to provide an
annual Federal Register notice of rules they have designated for
section 610 reviews within the succeeding 12 months. Subsection
610( c) is basically a notice provision that is designed to
facilitate public input into the mandated agency reviews of
existing rules.

A number of agencies have used the Unified Agenda of Federal
Regulatory and Deregulatory Actions to publish these notices,
although subsection 610( c) does not refer to or require the use
of the Agenda. The Unified Agenda is published in the Federal
Register twice each year by the Regulatory Information Service
Center (RISC) and provides for uniform reporting of data on
regulatory activities under development throughout the federal
government. In April 1997 and February 1998, we reported that
relatively few agencies had entries in the November 1996 and
October 1997 editions of the Unified Agenda that they
characterized as section 610 reviews, and that relatively few of
these agencies' entries met the requirements of subsection 610(
c). 2

This report responds to your request that we update and expand our
previous reports and testimony on this issue. Our specific
objectives were to determine, with regard to the April 1998 and
November 1998 editions of the Unified Agenda, (1) how many
agencies had no Agenda entries that

1 Section 601 of the RFA defines a small entity as including small
businesses, small governmental jurisdictions, or other small
organizations. 2 Regulatory Flexibility Act: Agencies' Use of the
November 1996 Unified Agenda Did Not Satisfy Notification
Requirements (GAO/ GGD/ OGC- 97- 77R, Apr. 22, 1997); Regulatory
Flexibility Act: Agencies' Use of the October 1997 Unified Agenda
Often Did Not Satisfy Notification Requirements (GAO/GGD-98-61R,
Feb. 12, 1998); and Regulatory Reform: Agencies' Section 610
Review Notices Often Did Not Meet Statutory Requirements (GAO/T-
GGD-98-64, Feb. 12, 1998).

B-282127 Page 2 GAO/GGD-99-55 Regulatory Flexibility Act

were characterized as section 610 reviews, whether agencies are
interpreting the review requirements consistently, and why certain
agencies that appeared subject to the requirements had no entries;
(2) how many of the section 610 review entries in these Agendas
appeared to meet the notification requirements in subsection 610(
c); (3) if the section 610 review entries did not appear to meet
the statutory requirements, why certain agencies' entries were
characterized as section 610 reviews; and (4) whether any federal
agencies had revised their section 610 review plans.

The April 1998 and November 1998 editions of the Unified Agenda
each contained about 4,500 entries that were submitted by 61
federal departments, agencies, and commissions. The April 1998
edition of the Agenda identified 22 entries from 7 agencies as
section 610 reviews. The November 1998 edition of the Agenda
identified 31 entries from 8 agencies as section 610 reviews. Six
of the more than 50 agencies with no section 610 review entries in
either edition of the Agenda indicated in these and 19 previous
editions of the Agenda that many of their regulatory actions would
have a SEISNSE, thereby indicating that the agencies may need to
review these rules under section 610. Officials in three of these
agencies offered different reasons why their agencies had no
section 610 review entries in the April or November editions of
the Agenda. However, we could not determine with certainty whether
any of the agencies without section 610 review entries in these
editions of the Agenda should have had such entries. The absence
of section 610 review entries may indicate that the agency does
not have any rules that would be potential candidates for review
that is, rules issued within the previous 10 years that have a
SEISNSE that had not already been reviewed. Also, no data are
readily available to identify such rules and agencies differ in
their interpretation of the section 610 review requirements.

Of the 22 entries in the April 1998 Unified Agenda that were
characterized as section 610 reviews, only 2 appeared to satisfy
all of the public notification requirements of subsection 610( c)
of the RFA. Of the 31 section 610 review entries in the November
1998 edition of the Agenda, only 1 appeared to satisfy all of the
requirements of subsection 610( c). The entries frequently
indicated that the underlying rules would not have a SEISNSE and/
or that the rules had already been reviewed.

The Department of Transportation (DOT) and the Environmental
Protection Agency (EPA) had the most section 610 review entries in
the April 1998 and November 1998 editions of the Unified Agenda.
Many of their section 610 review entries did not appear to meet
the notice requirements of subsection 610( c) because they used
the Section 610 Results in Brief

B-282127 Page 3 GAO/GGD-99-55 Regulatory Flexibility Act

Review notation to inform the public about the results of
previously conducted reviews, and because of the way in which they
interpreted certain entry elements in the Agenda.

One agency DOT indicated in the November 1998 edition of the
Unified Agenda that it had updated its 1981 section 610 review
plan to accomplish a more systematic review of all of its
regulations. DOT said it would review all of its rules between
1998 and 2008 to determine whether any rule published within the
previous 10 years had a SEISNSE. For any such rule, DOT said it
would then determine whether the impact of the rule could be
lessened.

The RFA (5 U. S. C. 601- 612) requires federal agencies to examine
the impact of proposed and existing rules on small businesses,
small organizations, and small governmental jurisdictions and to
solicit the ideas and comments of such entities for this purpose.
Specifically, whenever agencies are required to publish a notice
of proposed rulemaking (NPRM), sections 603 and 604 of the RFA
require agencies to prepare an initial and a final regulatory
flexibility analysis when publishing a proposed and final rule.
However, subsection 605( b) of the RFA says that sections 603 and
604 do not apply to any proposed or final rule if the head of the
agency certifies that the rule will not have a SEISNSE.

Section 602( a) of the RFA requires each agency to publish a
regulatory flexibility agenda in the Federal Register every April
and October, 3 including the following:

( 1) a brief description of the subject area of any rule which the
agency expects to propose or promulgate which is likely to have a
significant economic impact on a substantial number of small
entities;

( 2) a summary of the nature of any such rule under consideration
for each subject area listed in the agenda pursuant to paragraph
(1), the objectives and legal basis for the issuance of the rule,
and an approximate schedule for completing action on any rule for
which the agency has issued a general notice of proposed
rulemaking; and

( 3) the name and telephone number of an agency official
knowledgeable concerning the items listed in paragraph (1).

A number of agencies use the Unified Agenda of Federal Regulatory
and Deregulatory Actions to satisfy this and other requirements. 4
The Unified

3 Although the RFA requires agencies to publish regulatory
flexibility agendas in April and October of each year, RISC has
not published some of the Unified Agendas until May or November.
Background

Unified Agenda Requirements

B-282127 Page 4 GAO/GGD-99-55 Regulatory Flexibility Act

Agenda is compiled by RISC for the Office of Management and
Budget's (OMB) Office of Information and Regulatory Affairs
(OIRA), and has been published twice each year since 1983. Section
4( b) of Executive Order 12866 requires that each agency's agenda
contain certain elements and that it be prepared in a manner
specified by the Administrator of OIRA. RISC instructs the
agencies on how the entries are to be prepared, but does not
review agencies' entries to determine compliance with statutory or
other requirements before they are printed.

Each agency presents its entries in the Unified Agenda under one
of five headings according to the rulemaking stage of the entry,
which the Agenda defines as follows:

1. Prerule Stage actions agencies will undertake to determine
whether or how to initiate rulemaking. Such actions occur prior to
a Notice of Proposed Rulemaking (NPRM) and may include Advance
Notices of Proposed Rulemaking (ANPRMs) and reviews of existing
regulations.

2. Proposed Rule Stage actions for which agencies plan to publish
a Notice of Proposed Rulemaking as the next step in their
rulemaking process or for which the closing date of the NPRM
Comment Period is the next step.

3. Final Rule Stage actions for which agencies plan to publish a
final rule or an interim final rule or take other final action as
the next step in their rulemaking process.

4. Long- Term Actions items under development but for which the
agency does not expect to have a regulatory action within the next
12 months after publication of this edition of the Unified Agenda.
Some of the entries in this section may contain abbreviated
information.

5. Completed Actions actions or reviews the agency has completed
or withdrawn since publishing its last agenda. This section also
includes items the agency began and completed between issues of
the Agenda.

Within each entry, agencies are required to provide certain
information, including (1) the title of the regulation; (2) a
brief description of the problem the regulation will address; (3)
the section( s) of the Code of Federal Regulations that will be
affected by the action; (4) the dates and citations of the
regulatory action's past steps, and a projected date for at

4 Agencies also use the Unified Agenda to satisfy the requirement
in the Office of Federal Procurement Policy Act Amendments of 1988
(41 U. S. C. 421[ g]) that the Office of Federal Procurement
Policy publish a Procurement Regulatory Activity Report. Also,
section 4( b) of Executive Order 12866 requires agencies to
prepare an agenda of all regulations under development or review.

B-282127 Page 5 GAO/GGD-99-55 Regulatory Flexibility Act

least the next step; and (5) whether an analysis is required by
the RFA because the rule is likely to have a SEISNSE.

Subsection 610( a) of the RFA required each federal agency to
publish in the Federal Register a plan for the periodic review of
its rules that have or will have a SEISNSE within 180 days after
the effective date of the statute (Jan. 1, 1981). The plans were
to require agencies to review all existing rules within 10 years
of the effective date of the statute, and any new rules within 10
years of their publication as a final rule. Subsection 610( b)
specifies the factors that agencies should consider when
conducting reviews of existing rules. Subsection 610( c) requires
agencies to provide an annual Federal Register notice of rules
designated for section 610 reviews. Specifically, this subsection
says the following:

Each year, each agency shall publish in the Federal Register a
list of the rules which have a significant economic impact on a
substantial number of small entities, which are to be reviewed
pursuant to this section during the succeeding twelve months. The
list shall include a brief description of each rule and the need
for and legal basis of such rule and shall invite public comment
upon the rule.

Therefore, it is clear that Congress intended subsection 610( c)
to be an advance notice requirement.

The Unified Agenda primarily lists regulatory and deregulatory
actions that agencies have decided to take, such as the issuance
of upcoming proposed and final rules, or actions the agencies have
completed. However, Agenda entries describing regulatory actions
that have already been decided or completed cannot satisfy the
subsection 610( c) requirement that agencies list existing rules
that they will review within the next 12 months to determine
whether action is necessary. Similarly, Agenda entries that
indicate the rules being reviewed are not likely to have a SEISNSE
cannot satisfy the subsection 610( c) requirement that agencies
list rules for review that will have such an impact.

For the past several years, agencies have been able to indicate
that they are reviewing rules as part of their periodic reviews of
existing rules under the RFA by including the notation Section 610
Review after the title of the entries. In our April 1997 letter, 5
we concluded that none of the 21 entries that 3 agencies
identified as section 610 reviews in the November 1996 edition of
the Unified Agenda satisfied all of the requirements of subsection
610( c). Most of the entries (1) announced regulatory actions the
agencies were taking or planned to take and did not identify
existing

5 GAO/ GGD/ OGC- 97- 77R. Section 610 Requirements

and Our Previous Reports

B-282127 Page 6 GAO/GGD-99-55 Regulatory Flexibility Act

rules that the agencies were reviewing to assess their impact on
small entities or (2) appeared to involve rules that did not have
a SEISNSE, or that had an undetermined impact. Also, we said that
the size of the Agenda and the lack of any index or special
section in the document made it difficult for the public to find
and comment on the entries identified as section 610 reviews. We
recommended that, in fulfilling her responsibilities under
Executive Order 12866 to specify how agencies should prepare their
agendas, the OIRA Administrator instruct agencies that choose to
use the Unified Agenda to satisfy the requirements of subsection
610( c) of the RFA on how to do so. Specifically, we said the
Administrator should remind agencies using the Agenda for that
purpose that their entries must (1) identify existing rules with a
SEISNSE that the agencies expect to review during the next 12
months, (2) describe the rules and note the need for and legal
bases of the rules, and (3) invite public comment on the rules.

On June 10, 1997, the OIRA Administrator sent a memorandum to
regulatory policy officers at executive branch departments and
agencies containing guidelines and procedures for the October 1997
Unified Agenda. In those guidelines and procedures, the
Administrator pointed out that recent editions of the Agenda have
permitted agencies wishing to use the Agenda to publish subsection
610( c) notices to append the notation Section 610 Review to their
titles. She also quoted the text of subsection 610( c), noted that
agencies should include in the entries a description of the rule
and the need for the rule, and pointed out that the agencies'
preambles should invite public comment upon the rules. Finally,
she noted the issuance of our April 1997 letter on this topic.
However, the Administrator's instructions did not specifically
note that agencies' section 610 entries should only (1) involve
rules that have a SEISNSE and (2) reflect reviews of existing
rules that the agencies intend to initiate within the next 12
months.

We also recommended in our April 1997 letter that the Executive
Director of RISC develop an index or special section in the
Unified Agenda that specifically identifies the rules that
agencies plan to review under section 610 to provide the public
with adequate notice and opportunity to comment on those rules.
The October 29, 1997, edition of the Agenda contained such an
index that listed, for each of seven agencies, the entries for
which the agencies included a Section 610 Review designation. The
April 1998 and November 1998 editions of the Agenda also contained
such an index.

B-282127 Page 7 GAO/GGD-99-55 Regulatory Flexibility Act

In our February 1998 letter and testimony, 6 we concluded that
most of the entries in the October 1997 edition of the Unified
Agenda that the agencies identified as section 610 reviews did not
meet the public notification requirements of subsection 610( c).
Of the 34 such entries that 7 agencies identified, only 3
satisfied all of the requirements of subsection 610( c). As was
the case in the November 1996 edition of the Agenda, most of the
section 610 review entries either (1) involved rules that did not
appear to have a SEISNSE or had an undetermined impact or (2) did
not involve rules that the agencies indicated they would be
reviewing pursuant to section 610 during the next 12 months.

We recommended in our February 1998 letter that the Executive
Director of RISC, in consultation with OIRA and other agencies,
ensure that entries characterized as section 610 reviews in future
editions of the Unified Agenda meet the requirements of subsection
610( c) of the RFA. Specifically, we said those entries should (1)
involve rules that the agencies expect will have a SEISNSE; (2)
involve existing rules that are to be reviewed pursuant to section
610 in the succeeding 12 months; (3) describe the rules, the need
for the rules, and their legal bases; and (4) invite public
comment on the rules. To date, RISC has not taken action on this
recommendation.

The objectives of our review were to determine, with regard to the
April 1998 and November 1998 editions of the Unified Agenda, (1)
how many agencies had no entries that were characterized as
section 610 reviews, whether agencies are interpreting the review
requirements consistently, and why certain agencies that appeared
subject to the requirements had no entries; (2) how many of the
section 610 review entries in these Agendas appeared to meet the
notification requirements in subsection 610( c); (3) if the
section 610 review entries did not appear to meet the statutory
requirements, why certain agencies' entries were characterized as
section 610 reviews; and (4) whether any federal agencies had
revised their section 610 review plans.

To address our first objective, we reviewed the April 1998 and
November 1998 editions of the Unified Agenda and determined which
of the 61 agencies with at least 1 Agenda entry did not have
entries in the Agendas' index cataloging agencies' section 610
reviews. However, the absence of section 610 review entries in
those indexes does not necessarily mean that an agency is not
complying with section 610. For example, an agency may not have
any rules that would be potential candidates for review that is,

6 GAO/GGD-98-61R and GAO/T-GGD-98-64. Review Requirements Are

Unclear Objectives, Scope, and Methodology

B-282127 Page 8 GAO/GGD-99-55 Regulatory Flexibility Act

rules issued within the previous 10 years with a SEISNSE that it
had not already reviewed. No data are readily available to
identify which rules should have been reviewed at a particular
point in time, so we were unable to determine which agencies
should have had section 610 review entries in the April 1998 and
November 1998 editions of the Agenda.

We interviewed officials at EPA and DOT (agencies with the most
section 610 review entries in the April 1998 and November 1998
Agendas) to determine whether agencies are interpreting the
section 610 review requirements consistently. We also interviewed
officials at SBA's Office of Advocacy because of the SBA Chief
Counsel for Advocacy's responsibility under section 612 of the RFA
to monitor agencies' compliance with the act.

To determine which agencies may have issued rules with a SEISNSE
that could be candidates for review, we used the RISC Unified
Agenda database to determine which agencies had at least 10
entries in both the April 1998 and November 1998 editions of the
Agenda that indicated the associated rules would have a SEISNSE.
To determine whether the April 1998 and November 1998 editions
were anomalous for those agencies, we also obtained data from the
RISC database on the number of such entries from 19 previous
editions of the Agenda. We then interviewed officials at three
agencies the Departments of Health and Human Services (HHS) and
the Treasury and the Small Business Administration (SBA) to
determine why they had no section 610 entries in the 1998 Agendas.
We selected these 3 agencies because they were among 6 agencies
that each had at least 10 entries in virtually all 21 editions of
the Agenda, and time constraints prevented interviews at all 6
agencies.

To address our second objective, we examined each of the entries
in the April 1998 and November 1998 editions of the Unified Agenda
that were characterized as section 610 reviews to determine
whether the entries met all of the statutory requirements in
subsection 610( c) of the RFA. Specifically, we determined whether
each of the entries had the following characteristics:

(1) The entry indicated that it involved a rule that had a
SEISNSE. The introduction to the April 1998 edition of the Unified
Agenda stated that the Small Entities Affected field within Agenda
entries indicated whether the agencies believed that the
associated rule was likely to have a SEISNSE. The introduction to
the November edition indicated agencies were to use the field
labeled Regulatory Flexibility Analysis Required for this purpose.
If an entry in the April edition indicated that certain types of
small entities would be affected or if an entry in the November
edition

B-282127 Page 9 GAO/GGD-99-55 Regulatory Flexibility Act

indicated that a regulatory flexibility analysis was required, we
considered the entry to have met this requirement. However, if an
entry did not indicate that small entities would be affected or
that a regulatory flexibility analysis was required, we considered
the entry not to involve a rule with a SEISNSE and, therefore, not
to have met the requirements of subsection 610( c).

(2) The entry described a review of an existing rule within the
next 12 months. For example, if an entry indicated that a review
of an existing review would begin 2 months after the date the
Agenda was published in the Federal Register, we considered the
entry to have met this requirement. However, if the entry
indicated that the section 610 review was complete, we did not
consider the entry to have met the statutory requirements.

(3) The entry described the rule, stated why it was needed, and
provided its legal basis. If the narrative portion of the entry
contained this information, we considered the entry to have met
this requirement. However, if the entry did not contain this
information, we did not consider the entry to have met the
requirement.

To address our third objective, we interviewed officials in the
two agencies that had the largest number of section 610 review
entries in the April 1998 and November 1998 editions of the
Unified Agenda EPA and DOT. We also interviewed officials in OIRA
and SBA's Office of Advocacy regarding their interpretation of the
statutory requirements and the instructions in the Agenda.

To address our fourth objective, we reviewed the preambles to each
of the agencies' sections of the April 1998 and November 1998
editions of the Unified Agenda. We also asked officials at RISC,
OIRA, and SBA's Office of Advocacy whether they were aware of any
agencies that had updated their subsection 610( a) review plans.
We did not review previous editions of the Agenda and did not
attempt to survey or otherwise contact all agencies regarding
revisions to their review plans. Therefore, other agencies may
have revised their plans but those efforts are not reflected in
this report.

We conducted our work between January 1999 and March 1999 at OMB,
EPA, DOT, SBA, Treasury, and HHS headquarters in Washington, D.
C., in accordance with generally accepted government auditing
standards. We provided a draft of this report to the Director of
OMB and the Acting Executive Director of RISC for their review and
comment. We also provided relevant portions of the draft report to
officials in the

B-282127 Page 10 GAO/GGD-99-55 Regulatory Flexibility Act

Departments of HHS, Transportation, and the Treasury; EPA; and SBA
for their review and comment. Their views are presented at the end
of this letter, along with our evaluation. Appendixes I and II
contain reprints of the written comments from RISC and EPA.

More than 50 of the 61 federal departments, agencies, and
commissions that had entries in the April 1998 and November 1998
editions of the Unified Agenda did not have any section 610 review
entries. Six of these agencies indicated in these and previous
editions of the Agenda that some of their rules would have a
SEISNSE, thereby indicating that they issue rules that could be
subject to the section 610 review requirement. Officials in three
of these agencies offered different reasons why their agencies had
no section 610 review entries in the April 1998 or November 1998
editions of the Agenda. However, because of the absence of readily
available data and because the RFA's requirements are subject to
varying interpretations, we could not determine with certainty
whether any of the agencies without section 610 review entries
should have had such entries.

The April 1998 edition of the Unified Agenda was published in the
Federal Register on April 27, 1998, and included agendas from 61
federal departments, agencies, and commissions. 7 Those agendas
contained 4,504 entries printed on nearly 1, 400 pages of the
Federal Register. An index in the Agenda identified 22 entries
from 7 agencies with the Section 610 Review notation following the
title. These seven agencies were the Departments of Agriculture
(USDA) (1 entry), Education (2 entries), Labor (DOL) (6 entries),
and Transportation (DOT) (6 entries); EPA (4 entries); the Federal
Reserve System (2 entries); and the Federal Trade Commission (FTC)
(1 entry). Therefore, 54 federal departments, agencies, and
commissions did not have any section 610 review entries in the
April 1998 edition of the Agenda.

The November 1998 edition of the Unified Agenda was published in
the Federal Register on November 9, 1998, and included agendas
from 61 federal departments, agencies, and commissions. Those
agendas contained 4,560 entries printed on nearly 1,400 Federal
Register pages. An index in the Agenda identified 30 entries from
8 agencies with the Section 610 Review notation following the
title. The 8 agencies were USDA (1 entry), the Departments of
Education (2 entries), and Justice (1 entry), DOL (5 entries), DOT
(7 entries), EPA (11 entries), the Federal Reserve System (2
entries), and the FTC (1 entry). One additional EPA entry that had
the

7 The April 1998 and November 1998 editions of the Unified Agenda
each contained 62 agendas, 1 of which was from 3 agencies with
joint authority. Most Agencies Did Not

Have Section 610 Entries in the April 1998 or November 1998
Unified Agendas

Eight Agencies Had Section 610 Review Agenda Entries

B-282127 Page 11 GAO/GGD-99-55 Regulatory Flexibility Act

notation Section 610 Rule after the title should have been
included in the index, thereby raising the total number of section
610 review entries in the November 1998 edition of the Agenda to
31. Twenty- one of these 31 entries had appeared in the April 1998
edition of the Agenda and were updated for this edition.
Therefore, 53 federal departments, agencies, and commissions did
not have any section 610 review entries in the November 1998
edition of the Agenda.

Under sections 603, 604, and 605 of the RFA, agencies must prepare
a regulatory flexibility analysis for any proposed or final rule
for which they are required to publish an NPRM unless the head of
the agency certifies that the rule will not have a SEISNSE. Under
subsection 610( a), agencies are required to publish a plan for
the periodic review of agency rules that have or will have a
SEISNSE. Under subsection 610( c), agencies must publish notices
in the Federal Register of rules that they plan to review in the
next 12 months that have a SEISNSE.

All agencies are not interpreting the subsection 610( c) review
requirement in the same manner. For example, EPA officials told us
that they interpret the requirement in subsection 610( c) to mean
they must review any rule for which the agency prepared a final
regulatory flexibility analysis that is, that had a SEISNSE at the
time the final rule was promulgated. Therefore, if EPA issued a
final rule on December 31, 1988, that the agency concluded had a
SEISNSE and for which it prepared a final regulatory flexibility
analysis, the agency would have had to review that rule pursuant
to section 610 by December 31, 1998. Alternatively, if EPA issued
a rule on December 31, 1988, that it did not believe had a SEISNSE
and for which it did not prepare a final regulatory flexibility
analysis, the agency would not have to review the rule within 10
years.

However, DOT officials said they interpret the statute's use of
the present tense have in subsection 610( c) to mean that they
must review all rules that have a SEISNSE at the time the agency
conducts the review, not rules that had a significant impact years
before when they were promulgated. They said a rule that did not
have a SEISNSE at the time it was issued might currently have a
significant impact due to changes in the regulatory requirements
or changes in the external environment. Conversely, a rule that
had a SEISNSE at the time of its promulgation may no longer have
the same impact. Under this interpretation of section 610, the
officials said DOT must review all of its rules within 10 years of
their issuance to determine whether they have a SEISNSE at the
time of the review. If DOT determines that a rule has a SEISNSE,
DOT would then publish a notice of Agencies Interpret Review

Requirements Differently

B-282127 Page 12 GAO/GGD-99-55 Regulatory Flexibility Act

a section 610 review for those rules, inviting the public to
comment on whether the rules should be continued, revised, or
eliminated.

The RFA's legislative history does not indicate whether the
statute's use of the present tense have in subsection 610( c) was
intended to require agencies to review all of their rules within
10 years of their issuance, even if the agencies had determined
that the rules did not have a SEISNSE at the time they were
issued. SBA's Office of Advocacy issued an RFA implementation
guide for federal agencies in 1998 to help them determine what is
required under the act's provisions, but the Office also noted
that the guide is not the definitive interpretation of the law.
However, the guidance does not clarify whether section 610
requires agencies to review rules that had a SEISNSE at the time
they were issued or rules that have a SEISNSE at the time of the
review. Officials in the Office of Advocacy told us that they had
not previously considered this issue, and said either
interpretation of section 610 was defensible.

It is difficult if not impossible for us to determine which rules
an agency should be reviewing pursuant to section 610 of the RFA
at a particular point in time. Therefore, we could not determine
with certainty whether any of the agencies without section 610
review entries in the April 1998 or November 1998 editions of the
Unified Agenda should have had such entries. For example, an
agency may not have issued any final rules within the previous 10
years that had a SEISNSE at the time they were published or at the
time they were reviewed, depending on which interpretation of
section 610 is followed. Alternatively, the agency may have issued
final rules with a SEISNSE during that time frame, but published
the required review notices elsewhere in the Federal Register
during 1998 or at any time after the date the rule was issued. No
database exists delineating the rules that agencies issued within
the previous 10 years that have or had a SEISNSE or, if so, had
already been reviewed. Reviewing thousands of Federal Register
notices to determine which rules had a SEISNSE at the time they
were issued in more than 50 agencies would require time and
resource commitments that were beyond the scope of this review.
Determining which rules currently have a SEISNSE would be even
more difficult.

Because of these difficulties, we instead attempted to determine
which of the more than 50 agencies that had no section 610 review
entries in the 1998 editions of the Unified Agenda appeared to
develop, propose, or issue rules with a SEISNSE. We asked RISC to
identify the agencies that had at least 10 entries in both the
April and November editions of the Agenda in which the agencies
had indicated that the related rules would have a Agencies Offered
Different

Reasons for No Section 610 Review Entries

B-282127 Page 13 GAO/GGD-99-55 Regulatory Flexibility Act

SEISNSE. As table 1 shows, RISC indicated that 12 agencies had at
least 10 such entries in both editions of the Agenda. Of these 12
agencies, the following 7 had no section 610 review entries in the
April and November editions of the Agenda: the Departments of
Commerce, HHS, the Interior, and the Treasury; the Federal
Communications Commission (FCC); the Securities and Exchange
Commission (SEC); and SBA. Three of these 7 agencies (HHS,
Treasury, and FCC) had 50 or more entries in both the April 1998
and November 1998 editions of the Agenda that they indicated would
have a SEISNSE, but the 3 agencies did not have section 610 review
entries in those editions of the Agenda.

Number of Unified Agenda entries with a SEISNSE Department or
agency April 1998

Unified Agenda November 1998 Unified Agenda USDA 67 50

Commerce 43 48 HHS 107 58 Interior 34 30

Justice 27 14 DOL 38 42 DOT 39 33

Treasury 61 64

EPA 193 21

FCC 74 81 SBA 20 20 SEC 22 22

Note: Bolded agencies had no section 610 review entries in the
April 1998 or November 1998 editions of the Unified Agenda.

Source: RISC.

We also reviewed previous editions of the Unified Agenda to
determine if the previously mentioned seven agencies had published
section 610 review notices. Because agencies did not identify
their section 610 reviews with the Section 610 Review notation
after the entry title until October 1996, our review was limited
to the October 1996, April 1997, and October 1997 editions of the
Agenda. Of the seven agencies, only SBA had any section 610 review
entries three in the October 1996 edition of the Agenda that were
repeated in the April 1997 edition. However, SBA's Chief Counsel
for Legislation and Regulation told us during this review that
those entries should not be considered section 610 review notices.
Therefore, none of these seven agencies had section 610 review
entries in the October 1996 through November 1998 editions of the
Agenda.

Table 1: Twelve Agencies Had at Least 10 Entries With a SEISNSE in
the April 1998 and November 1998 Editions of the Unified Agenda

B-282127 Page 14 GAO/GGD-99-55 Regulatory Flexibility Act

To ensure that the April 1998 and November 1998 editions of the
Unified Agenda were not atypical, we also obtained RISC data on
how frequently these 7 agencies indicated that the rules related
to their entries would have a SEISNSE from 19 previous editions of
the Agenda during the previous 10 years: from the fall of 1988
(when agencies first were required to indicate in their entries
whether the related rules would have a SEISNSE) to the fall of
1997. As table 2 shows, during the first half of this 10- year
period, the Department of the Interior frequently had fewer than
10 entries that met this standard. However, the other 6 agencies
almost always had 10 or more such entries, averaging more than 30
Agenda entries each year, in which they indicated that the rules
would have a SEISNSE. Therefore, it seems likely that these six
agencies would have issued a number of rules during the previous
10 years with a SEISNSE that could have been subject to the
section 610 review requirement during 1998.

Number of SEISNSE entries by department or agency Unified Agenda
edition Commerce HHS Interior Treasury SBA FCC SEC Fall 1988 10 41
<10 <10 31 56 17 Spring 1989 17 43 <10 12 32 57 11 Fall 1989 16 51
<10 20 27 54 19 Spring 1990 29 63 <10 56 22 54 19 Fall 1990 32 68
<10 60 34 61 28 Spring 1991 37 70 14 65 43 61 17 Fall 1991 35 84
12 75 50 57 23 Spring 1992 26 70 <10 65 50 51 <10 Fall 1992 39 76
<10 87 56 52 23 Spring 1993 38 91 <10 83 55 56 34 Fall 1993 33 86
12 75 61 48 29 Spring 1994 40 82 25 78 47 45 35 Fall 1994 47 85 27
73 44 47 32 Spring 1995 35 49 18 49 47 48 35 Fall 1995 38 74 23 52
60 43 34 Spring 1996 37 90 30 59 49 65 33 Fall 1996 46 103 22 53
17 75 48 Spring 1997 37 111 20 58 15 68 41 Fall 1997 29 113 32 54
13 70 34 Note: The "< 10" character indicates the agency had less
than 10 entries with a SEISNSE in that edition of the Unified
Agenda.

Source: RISC.

We contacted officials at SBA, Treasury, and HHS to determine why
they did not have section 610 review entries in the April 1998 or
November 1998 editions of the Unified Agenda (or in the three
previous editions) despite consistently having many Agenda entries
during the previous 10 years that indicated the related rules had
or would have a SEISNSE. SBA's Chief Counsel for Legislation and
Regulation told us that SBA had reviewed and

Table 2: Six Agencies Generally Had at Least 10 Entries With a
SEISNSE in Previous Editions of the Unified Agenda

B-282127 Page 15 GAO/GGD-99-55 Regulatory Flexibility Act

revised all of its rules in the mid- 1990s as part of the Clinton
Administration's regulatory reform initiative, 8 and she said that
effort met the spirit and intent of the section 610 review
requirement. As a result of that effort, she said SBA clarified,
simplified, and shortened its sections of the Code of Federal
Regulations but did not change the substantive requirements of the
rules. Because any rules issued after the initiative would have
been less than 10 years old in 1998, the Chief Counsel said SBA
had no rules with a SEISNSE that required section 610 review
announcements in the April 1998 or November 1998 editions of the
Agenda. The Chief Counsel said SBA announced its intention to
reinvent all of its rules in its October 1995 regulatory plan on
the basis of public input from meetings with small business owners
and trade associations. However, the October 1995 regulatory plan
announcement indicated that SBA had already conducted its review
and that, as a result, the agency had already decided to reinvent
its regulations. Also, SBA subsequently published NPRMs that
invited public comments on the results of its review and its
decision to rewrite its regulations. Therefore, although SBA
believes that it met the spirit of the section 610 review
requirement, neither SBA's regulatory plan announcement or these
Federal Register notices met the specific requirement of
subsection 610( c) of the RFA that the agency publish a list of
rules with a SEISNSE that it planned to review in the next 12
months to determine whether they should be continued without
change, amended, or rescinded.

Officials from the Department of the Treasury told us that
Treasury did not have section 610 review entries in the April 1998
or November 1998 editions of the Unified Agenda because the
Department has issued only two final rules during the previous 10
years with a SEISNSE a rule issued by the Bureau of Alcohol,
Tobacco and Firearms (BATF) in 1990 and another BATF rule issued
in 1996. They said Treasury announced its intention to review the
1990 rule in the January 10, 1997, edition of the Federal
Register. 9 As a result of that review, the officials said
Treasury plans to issue proposed amendments to the rule in June
1999. The officials said Treasury has not announced its intention
to review the 1996 BATF rule, but said the review will be
completed within the 10- year time limit prescribed in section
610.

8 SBA's initiative was part of a governmentwide initiative by many
federal agencies, not just SBA. For an analysis of that
initiative, see Regulatory Reform: Agencies' Efforts to Eliminate
and Revise Rules Yield Mixed Results (GAO/GGD-98-3, Oct. 2, 1997).

9 As previously noted, agencies are not required to publish
section 610 review notices in the Unified Agenda and the
Department of the Treasury did not do so for this action.

B-282127 Page 16 GAO/GGD-99-55 Regulatory Flexibility Act

Treasury officials said that most of the Department's regulations
subject to the RFA do not have a SEISNSE because they generally
(1) amend and fine- tune existing rules (and therefore have only
an incremental effect, not a significant effect on a substantial
number of small entities) or (2) interpret statutory requirements
and do not impose any significant new requirements themselves. The
officials said they now realize that Treasury had mischaracterized
a number of its Agenda entries during the previous 10 years as
involving rules with a SEISNSE. They said some Treasury components
thought the Small Entities Affected field should be used to
indicate rules that had any impact on small entities, not just a
SEISNSE (as RISC's instructions indicated).

HHS officials said that the Department issues a number of rules
each year that have a SEISNSE (e. g., most of the rules issued by
the Health Care Financing Administration). However, they said HHS
did not have section 610 review entries in the April 1998 or
November 1998 editions of the Unified Agenda because they had not
interpreted the guidance to require a separate listing. The
officials said they believed that HHS had satisfied the
requirements of subsection 610( c) by listing rules to be
promulgated or revised in the Unified Agenda and explicitly
indicating which of these rules were expected to have a SEISNSE.
The HHS officials said they now understand that this
interpretation may not have been correct and will make an effort
in future editions of the Agenda to delineate which rules they
plan to review pursuant to section 610 of the RFA within the
succeeding 12 months.

Only a few of the section 610 review entries in the April 1998 and
November 1998 editions of the Unified Agenda appeared to satisfy
all of the notification requirements of subsection 610( c). As was
the case in the two previous editions of the Agenda that we
reviewed, the entries frequently indicated that (1) the reviews
did not involve rules that would have a SEISNSE or (2) the rules
had already been reviewed.

On January 7, 1998, the OIRA Administrator sent a memorandum to
regulatory policy officers at executive departments and agencies
describing guidelines and procedures for publishing the April 1998
edition of the Unified Agenda. In the attachment to that
memorandum, she repeated the observations in her June 10, 1997,
memorandum regarding the use of the Agenda to satisfy the
subsection 610( c) requirement. Specifically, she noted that some
agencies have chosen to use the Agenda to publish subsection 610(
c) notices, and quoted the text of subsection 610( c) in the
attachment. She also noted that agencies should include in the
entries a description of the rule and the need for the rule, and
pointed Few Agenda Entries

Appeared to Satisfy Subsection 610( c) Requirements

Only Two Entries in the April 1998 Agenda Appeared to Meet
Subsection 610( c) Requirements

B-282127 Page 17 GAO/GGD-99-55 Regulatory Flexibility Act

out that the agencies' preambles should invite public comment on
the rules. Finally, she again noted the issuance of our April 1997
letter on this topic. However, as was the case in the June 1997
memorandum, she did not specifically note that agencies' section
610 entries should involve rules with a SEISNSE and should
describe forthcoming reviews, not reviews that the agencies had
already completed.

As previously mentioned, the April 1998 edition of the Unified
Agenda contained 4,504 entries that were printed on nearly 1,400
pages of the Federal Register. The Agenda's index identified 22
entries from 7 agencies with the Section 610 Review notation
following the title. We examined these 22 entries and concluded
that only 2 of them appeared to satisfy all of the notification
requirements in subsection 610( c). In 12 of the entries, the
Small Entities Affected field was coded No (7 entries) or
Undetermined (5 entries). 10 Because this field was intended to
identify rules with a SEISNSE, and because section 610 reviews
are, by definition, reviews of existing rules, we concluded that
(1) the existing rules being reviewed did not have a SEISNSE
(either at the time the rule was issued or at the time of the
review) and (2) these entries should not have been identified as
subsection 610( c) entries.

Seven of the 10 remaining Section 610 Review entries in the April
1998 Unified Agenda did not appear to satisfy the notification
requirements in subsection 610( c) because they announced
regulatory actions the agencies had taken, were taking, or planned
to take (sometimes as a result of a previous review), not a review
to determine what actions to take. Therefore, we concluded that
these entries did not involve an existing rule that was to be
reviewed pursuant to section 610 during the succeeding 12 months.
These entries included the following examples:

 A USDA Agenda entry indicated that the Department's Agricultural
Marketing Service planned to issue a final rule consolidating
federal milk marketing orders. The entry indicated that an NPRM
was published in January 1998 and that the comment period for the
proposed rule ended on March 31, 1998 nearly a month before the
Section 610 Review entry was published in the April 1998 edition
of the Agenda.

 A DOT entry indicated that the Department's Office of the
Secretary of Transportation (OST) planned to issue an NPRM in July
1998 regarding its

10 The agencies indicated that the remaining 10 entries involved
rules that would have a significant economic impact on a
substantial number of small businesses (5 entries); businesses and
governments (2 entries); businesses and other organizations (1
entry); or businesses, governments, and other organizations (2
entries).

B-282127 Page 18 GAO/GGD-99-55 Regulatory Flexibility Act

drug and alcohol procedural rules that will not include major
substantive changes to how we test but rather to update and
clarify provisions of the rules. The entry also noted that the
comment period for a previously published advance notice of
proposed rulemaking (ANPRM) that announced the review had ended in
July 1996.

 Another DOT/ OST entry indicated that the Department was
reexamining its regulations on computer reservation systems to see
whether they should be readopted and, if so, whether they should
be changed. However, the entry indicated that the extended comment
period for the ANPRM announcing the review had ended in February
1998, and that an NPRM was planned in April 1998.

 Another entry indicated that DOT's Research and Special Programs
Administration (RSPA) planned to issue a proposed rule in
September 1998 amending the Hazardous Materials Regulations in
several specific ways. For example, the entry said RSPA would (1)
provide for the manufacture of compressed gas cylinders to certain
new DOT specifications; (2) revise requirements applicable to the
maintenance, requalification, and repair of all DOT specification
cylinders; and (3) simplify the requirements for filling
cylinders. Although the entry said that a small entities review
under section 610 would be included as part of this action, the
entry indicated that the agency had already decided what actions
it would take and was not soliciting public comments to determine
whether the existing rule should be continued, eliminated, or
revised.

 An FTC entry indicated that the agency was conducting a review of
a rule related to imitation political and imitation numismatic
items, and that it had requested comments on the rule with
particular emphasis on the effect on small businesses. However,
the entry also indicated that the comment period for the review
ended on May 27, 1997 11 months before the date this Section 610
Review notice was printed in the Agenda.

One of the three remaining Section 610 Review entries in the April
1998 Unified Agenda did not appear to satisfy the subsection 610(
c) requirement that the agency describe the rule to be reviewed
and state why it was needed. The Federal Reserve System indicated
in one of its Agenda entries that it was reviewing its regulations
in response to the requirements of section 303 of the Riegle
Community Development and Regulatory Improvement Act of 1994. The
entry also indicated that the Board was reviewing Regulation B,
Equal Credit Opportunity and Regulation Z, Truth in Lending.
However, the entry did not otherwise describe these regulations or
explain why they were needed.

B-282127 Page 19 GAO/GGD-99-55 Regulatory Flexibility Act

The two remaining entries one each from DOL and EPA appeared to
satisfy all of the subsection 610( c) notification requirements.
For example, the EPA entry indicated that the agency was
initiating a review of its 1988 rule on standards of performance
limiting emissions of particulate matter from new residential wood
heaters. EPA said the review would be completed by March 1999 and
was intended to determine if the rule should be continued without
change, or should be amended or rescinded, to minimize adverse
economic impacts on small entities. EPA also described why the
rule was necessary (wood heaters were said to cause or contribute
significantly to air pollution) and said that it had determined
that the rule would have a significant impact on a substantial
number of small entities. Finally, EPA said that it was soliciting
comments on a number of factors, including the rule's complexity,
overlap with other rules, and the degree to which technology or
other factors have changed.

On July 8, 1998, the Acting Administrator of OIRA sent a
memorandum to regulatory policy officers at executive departments
and agencies describing guidelines and procedures for publishing
what eventually became the November 1998 edition of the Unified
Agenda. In the memorandum attachment, he repeated the observations
in OIRA's June 1997 and January 1998 memorandums regarding the use
of the Agenda to satisfy the subsection 610( c) requirement.
Although the memorandum referenced our April 1997 report, it did
not specifically note that agencies' section 610 entries should
involve rules with a SEISNSE and should describe forthcoming
reviews, not reviews that the agencies had already completed.

As previously mentioned, the November 1998 edition of the Unified
Agenda contained 4,560 entries that were printed on nearly 1,400
pages of the Federal Register. We identified 31 entries from 8
agencies with the Section 610 Review or Section 610 Rule notation
after the title. We examined these 31 entries and concluded that
only 1 of them appeared to satisfy all of the notification
requirements in subsection 610( c). In 24 of the entries, the
Regulatory Flexibility Analysis Required field was coded No (17
entries) or Undetermined (7 entries). 11 Because this field was
intended to identify rules with a SEISNSE, and because section 610
reviews are, by definition, reviews of existing rules, we
concluded that (1) the existing rules being reviewed did not have
a SEISNSE (either at the

11 The agencies indicated that the other entries involved rules
that would have a significant economic impact on a substantial
number of small businesses (2 entries); businesses and governments
(1 entry); businesses and other organizations (1 entry); or
businesses, governments, and other organizations (2 entries). EPA
indicated in one of its entries that the rule would affect small
entities, but did not indicate what type( s) of entities would be
affected. Only One of the November

1998 Agenda Entries Appeared to Satisfy Subsection 610( c)
Requirements

B-282127 Page 20 GAO/GGD-99-55 Regulatory Flexibility Act

time the final rules were published or at the time of the review)
and (2) the entries should not have been identified as subsection
610( c) entries.

Six of the seven remaining Section 610 Review entries in the
November 1998 Unified Agenda did not appear to satisfy the
notification requirements in subsection 610( c) because they did
not involve an existing rule that was to be reviewed pursuant to
section 610 during the succeeding 12 months. These entries
announced regulatory actions the agencies had taken, were taking,
or planned to take, not a review to determine what actions to
take, and included the following examples:

 A USDA section 610 review entry indicated that the Department's
Agricultural Marketing Service would be issuing a final rule
consolidating federal milk marketing orders. The entry was exactly
the same as it was in the April 1998 edition of the Agenda except
that the November entry indicated the comment period for the
proposed rule ended on April 30, 1998, not March 31, 1998.

 Similarly, an FTC section 610 review entry updated an April 1998
entry on imitation numismatic and imitation political items,
noting that the Commission had completed its review of the rule
and took final action on July 7, 1998 more than 4 months before
the publication of the November 1998 edition of the Agenda.

 A Department of Justice entry indicated that the Department's
Immigration and Naturalization Service (INS) was planning to issue
a final rule implementing a section in the Illegal Immigration
Reform and Immigration Responsibility Act of 1996 (IIRIRA) that
requires a reduction in the number of documents that may be
accepted in the employment verification process. The entry stated
that INS had published the proposed rule in February 1998, and
that the comment period for the proposal closed in April 1998. The
entry also said that INS was conducting a section 610 review in
conjunction with IIRIRA implementation. However, section 610
reviews are intended to focus on existing rules, not rules that
are in the process of being promulgated.

The remaining entry was EPA's update of its April 1998
announcement of a review of its standards of performance limiting
emissions of particulate matter from new residential wood heaters.
As was true of its April 1998 announcement, the entry appeared to
satisfy all of the subsection 610( c) notification requirements.
The entry indicated that EPA was initiating a review of the rule
under section 610 of the RFA to determine whether it should be
continued, amended, or rescinded and again indicated that the
review would be completed in March 1999. Although the entry's

B-282127 Page 21 GAO/GGD-99-55 Regulatory Flexibility Act

Regulatory Flexibility Analysis Required field was coded No, the
abstract portion of the entry said that EPA had performed the
analysis and determined that the rule would have a significant
impact on a substantial number of small entities.

We discussed our findings regarding the previous objective with
officials in EPA and DOT the two agencies that had the most
section 610 review entries in the April 1998 and November 1998
editions of the Unified Agenda. These agencies' efforts are
noteworthy in that their entries indicate an attempt to review
their existing rules with a SEISNSE as required by the RFA.
However, these agencies also had the most entries that we
determined had been incorrectly labeled as section 610 reviews.
Officials in both agencies said they used some of their section
610 review entries to inform the public about the results of
previously conducted reviews. Although the intent behind this
effort is laudable, labeling these entries as section 610 reviews
is inconsistent with OIRA's guidance and RISC's instructions and
could lead to misinterpretation by the public. The officials also
said that they viewed certain fields in the Agendas differently
than we did, but RISC's instructions are not clear regarding how
these fields should be completed.

Officials in both EPA and DOT said that they did not view the
Section 610 Review notations after the titles of their entries or
the section 610 review indexes in both editions of the Unified
Agenda as being limited to the announcements of forthcoming
reviews. They said they also used the notations and the indexes to
indicate the results of reviews that had already been completed,
thereby closing the loop and allowing the public to determine
whether previously announced reviews had led to a subsequent
regulatory action (e. g., a proposed or final rule) or no change
in the underlying requirement. They also said that their entries
make clear which entries announce reviews in advance and which
entries carry out the agency's practice of informing the public
that a previously announced review is complete. DOT officials said
the RFA does not preclude conducting a section 610 review after an
agency announces its plans to issue, or after issuing, an NPRM. In
fact, they said a section 610 review can be very effective at this
stage. They said it was RISC that decided to characterize entries
with the Section 610 Review notation after the titles as
subsection 610( c) notices, and that RISC's instructions do not
preclude using these entries to describe the results of previous
reviews. They also said that the preamble to their section of the
Agenda says that their agenda includes those regulations to be
reviewed under the RFA or those for which review has been
concluded since the last agenda. Similarly, EPA EPA and DOT
Officials

Said Section 610 Entries Were Appropriate

Agencies' Officials Said They Attempted to Inform Public of
Results of Reviews

B-282127 Page 22 GAO/GGD-99-55 Regulatory Flexibility Act

officials said RISC's approach of indexing announcements of both
EPA's forthcoming and completed reviews together has created
confusion.

Although EPA's and DOT's intent to keep the public informed about
the results of previously conducted section 610 reviews is
laudable, that approach is not consistent with RISC's instructions
in the front of the April 1998 and November 1998 editions of the
Unified Agenda. RISC's instructions clearly stated that [ t] he
notation Section 610 Review' following the title indicates that
the agency has selected the rule for its periodic review of
existing rules under the Regulatory Flexibility Act (5 U. S. C.
610[ c]). Subsection 610( c) of the RFA requires agencies to
publish a list of rules which are to be reviewed. Also, the
introduction to the section 610 indexes in these Agenda editions
said an agency that uses the Section 610 Review notation after the
titles of certain entries indicates the rules that it plans to
review in the next year. The introduction also said, the following
index lists the regulatory actions for which agencies included
this designation. RISC has used the same approach in its
instructions and in the introduction to the index in several
editions of the Agenda. Also, OIRA's June 1997, January 1998, and
June 1998 memorandum attachments describing guidelines and
procedures for publishing the Unified Agenda have similarly
indicated that Section 610 Review entries would be used to
identify rules that your agency has selected for review under
section 610( c). Therefore, DOT and EPA should have been aware of
how the Section 610 Review notation would be interpreted.

On the basis of RISC's instructions, the introduction to the
section 610 review index in the Unified Agenda, and the statute, a
member of the public could reasonably assume that entries with the
Section 610 Review notation after the title and the section 610
index in the back of the Unified Agenda would identify forthcoming
reviews on which the public could comment regarding whether the
underlying rule should be continued without change, amended, or
eliminated. We made the same assumption when we reviewed the April
1998 and November 1998 editions of the Agenda, as well as when we
reviewed the October 1996 and November 1997 editions of the
Agenda. However, many of the agencies' section 610 review entries
appeared to indicate that the agencies had already determined
whether the underlying rule should be continued, amended, or
eliminated. As a result, we concluded that many of the agencies'
section 610 review entries were incorrectly labeled and did not
meet the requirements of the statute.

B-282127 Page 23 GAO/GGD-99-55 Regulatory Flexibility Act

In the April 1998 edition of the Unified Agenda, agencies were
required to complete a field within each entry entitled Small
Entities Affected. RISC's introduction to the Agenda said this
field indicated whether the rule is expected to have a significant
economic impact on a substantial number of small entities' as
defined by the Regulatory Flexibility Act (5 U. S. C. 601 et seq.)
and, if so, whether the small entities are businesses,
governmental jurisdictions, or organizations. In the November 1998
edition of the Agenda, agencies had to complete a field entitled
Regulatory Flexibility Analysis Required, which the RISC
instructions said indicated whether an analysis is required by the
RFA because the rule is likely to have a SEISNSE.

EPA and DOT officials said they did not view the Small Entities
Affected or the Regulatory Flexibility Analysis Required fields as
referring to the underlying rule on which the agencies' section
610 reviews were conducted. They viewed these fields as referring
to whatever regulatory action was being announced by the Unified
Agenda entry. Therefore, if an entry announced a forthcoming
review of an existing rule, they said the Small Entities Affected
or Regulatory Flexibility Analysis Required field within that
entry referred to the review being conducted. However, DOT
officials said that because the RFA does not require a regulatory
flexibility analysis at the review stage, the Agenda should allow
agencies a not applicable response.

Neither RISC's instructions in the Unified Agendas nor OIRA's
memorandums instructing agencies on how the Agendas should be
prepared were clear regarding how these fields should be
completed. Nevertheless, DOT and EPA's interpretation of this
field is confusing when taken in combination with the agencies'
characterization of these entries as announcing section 610
reviews. A section 610 review is, by definition, a review of an
existing rule that has or had a SEISNSE. A notice under subsection
610( c) identifies an existing rule with a SEISNSE that the agency
intends to review within the next 12 months. However, many of the
EPA and DOT entries that were characterized as section 610 reviews
were also characterized as either not having a SEISNSE or having
an Undetermined impact on small entities. As a result, we
concluded that these entries did not meet the requirements of
subsection 610( c).

Subsection 610( a) of the RFA required agencies to publish a plan
in the Federal Register for the review of rules issued by the
agencies that have or will have a SEISNSE. The statute says the
plan must provide for the review of all such rules existing on the
effective date of this chapter (Jan. 1, 1981) within 10 years of
that date and for the review of such rules Agency Officials Said
They

Identified Effect of Actions Being Announced, Not Underlying Rules

DOT Updated Its 1981 Review Plan

B-282127 Page 24 GAO/GGD-99-55 Regulatory Flexibility Act

adopted after the effective date within 10 years of their
publication as final rules. A congressional review of agencies'
actions regarding this requirement indicated that nearly all of
the major agencies had established these review plans. The statute
says that the plans may be amended by the agency at any time by
publishing the revision in the Federal Register, but it does not
require such amendments.

Our review of the April 1998 and November 1998 editions of the
Unified Agenda and our discussions with officials from RISC and
OIRA indicated that one agency DOT had updated its review plan.
DOT published its original plan on June 29, 1981, and published an
updated plan in the preamble to its agenda in the November 1998
edition of the Agenda. 12 DOT said it updated the plan to
accomplish a more systematic review of all of its regulations. DOT
officials told us that the update reflects their understanding of
how the RFA should be interpreted that is, that the RFA calls for
a review of all agency rules issued within the past 10 years that
have a SEISNSE.

In the updated plan, DOT said that its OST and all but one of the
Department's operating administrations (e. g., the Federal
Aviation Administration, Coast Guard, and the National Highway
Traffic Safety Administration) developed a plan for the analysis
and review of all their rules between 1998 and 2008, although some
administrations with smaller regulatory programs expected to
complete the reviews in less than 10 years. Generally, the
agencies divided their rules into 10 different groups and planned
to analyze 1 group each year, requesting public comment on the
timing of the reviews. The analysis is to first determine whether
any rule published in the previous 10 years has a SEISNSE, and the
results of the reviews will be published in each October's Unified
Agenda. For any rules that have a SEISNSE, DOT plans to indicate
that it will do a section 610 review to determine whether the
impact of the rules can be lessened and will describe the review
in detail.

EPA officials said they do not believe that their 1981 review plan
needs to be updated. They said they understand the RFA to require
review of all rules that had a SEISNSE at the time the final rule
was promulgated, and that their plan reflects that understanding.
They also noted that the RFA does not require agencies to update
their review plans.

Only a few agencies had any entries in the April 1998 and November
1998 editions of the Unified Agenda that they characterized as
section 610

12 For a copy of the plan, see 63 FR 62030. Conclusions

B-282127 Page 25 GAO/GGD-99-55 Regulatory Flexibility Act

reviews. Our analysis of previous editions of the Agenda indicated
that some of the agencies that did not have section 610 entries
appeared to engage in rulemaking with a SEISNSE and therefore
could be subject to the review requirements. However, it is
impossible to know whether certain rules issued within the past 10
years with a SEISNSE still remain to be reviewed. Agencies differ
regarding which rules need to be reviewed those that had a SEISNSE
at the time they were published as final rules or those that have
a SEISNSE at the time of the review. Also, no data are readily
available to identify which rules should be reviewed or have
already been reviewed.

For several years, RISC's instructions in the front of the Unified
Agenda, its introduction to the Agenda's section 610 index, and
OIRA's guidelines have indicated that entries with Section 610
Review notations after the titles will be viewed as announcements
of forthcoming reviews of existing rules on which the public can
comment. However, RISC's and OIRA's instructions have not
prevented some Agenda entries from being incorrectly labeled as
section 610 reviews even though those entries did not meet the
requirements of subsection 610( c).

We do not believe that the agencies intentionally attempted to
mislead the public. Part of the problem appears to be that some
agencies want to inform the public about the results of previously
conducted section 610 reviews. Although this intent is laudable,
it contributes to confusion regarding which of the agencies'
Section 610 Review entries are actually subsection 610( c) notices
of forthcoming reviews on which the public can comment. Also, RISC
instructions are unclear regarding whether the Regulatory
Flexibility Analysis Required field within the entries refers to
the underlying rule being reviewed or to the action described in
the entry (e. g., the section 610 review itself).

If Congress is concerned that section 610 of the RFA has been
subject to varying interpretations, it may wish to consider
specifying whether section 610 reviews should be done of rules
that had a SEISNSE at the time they were published as final rules
or whether such reviews should be done of rules that, at the time
of the review, have a SEISNSE.

In fulfilling his responsibilities under Executive Order 12866 to
specify how agencies should prepare their agendas, we recommend
that the Acting OIRA Administrator instruct agencies that choose
to use the Unified Agenda to satisfy the requirements of
subsection 610( c) of the RFA on how to do so. Specifically, the
Acting OIRA Administrator should require agencies to indicate in
the notation after the entry titles whether their Matter for

Congressional Consideration

Recommendations

B-282127 Page 26 GAO/GGD-99-55 Regulatory Flexibility Act

section 610 review entries are forthcoming reviews (e. g., with
the notation New Section 610 Review) or report the results of
previously conducted reviews (e. g., with the notation Results of
Section 610 Review).

We also recommend that the Acting Executive Director of RISC
reflect this difference between forthcoming and completed section
610 reviews in the Unified Agenda's index to entries that agencies
have designated for section 610 review. Finally, we recommend that
the Acting Executive Director clarify whether the Regulatory
Flexibility Analysis Required field in a section 610 review entry
refers to the underlying rule being reviewed or to the effect of
the review itself.

On March 8, 1999, we sent a draft of this report to the Director
of OMB and the Acting Executive Director of RISC for their review
and comment. On March 16, 1999, the Acting Administrator of OIRA
provided OMB's comments on the draft report. He said that he
agreed with the concerns we raised in the report, and he also said
OIRA is working with RISC and the agencies so that the format of
the Unified Agenda more clearly differentiates between the
subsection 610( c) notices and the results of section 610 reviews.

On March 16, 1999, the Acting Executive Director of RISC provided
written comments on the draft report, which are reproduced in
appendix I. The Acting Executive Director agreed with our first
recommendation that the Unified Agenda's index reflect the
difference between forthcoming and completed section 610 reviews.
He suggested creating a separate field within each agenda entry
showing whether the entry is a section 610 review or the result of
a previously completed review. We believe this approach would
address the underlying problem that we identified. The RISC Acting
Executive Director also agreed with our second recommendation that
he clarify whether the Regulatory Flexibility Analysis Required
field in a section 610 review entry refers to the underlying rule
being reviewed or to the effect of the review itself. He proposed
adding a general statement in the data call guidelines, the
instructions for submitting data, and the RISC preamble that the
information agencies provide in the Unified Agenda applies to the
activity being reported and not the underlying rule being reviewed
or amended. Again, we believe this approach would address the
underlying problem we identified.

On March 8, 1999, we also provided relevant portions of the draft
report to officials in the Departments of HHS, Transportation, and
the Treasury; EPA; and SBA for their review and comment. Each of
the agencies Agency Comments and

Our Evaluation

B-282127 Page 27 GAO/GGD-99-55 Regulatory Flexibility Act

provided suggestions to clarify particular sections of the report,
which we included in this report as appropriate. DOT officials
offered a number of substantive comments clarifying and
elaborating their position regarding the RFA's requirements, which
we incorporated as appropriate. For example, we noted that DOT
believes the RFA does not preclude conducting a section 610 review
after announcing its plans to issue, or after issuing, an NPRM. We
also added a sentence indicating that we did not believe that the
agencies intentionally misled the public regarding the nature of
their section 610 review announcements. After reviewing those
changes, the DOT officials said they agreed with the need to
clarify how the Unified Agenda should be used to reflect section
610 reviews, but had no further comment. Officials in HHS,
Treasury, and SBA generally agreed with our characterizations of
their section 610 review actions in the draft report.

The Director of EPA's Office of Regulatory Management and
Information provided written comments on the draft report, which
are reproduced in appendix II. The Director said our report
documented that the requirements of section 610 are open to
several legitimate interpretations, and that members of the public
could be confused by the distinct and mutually inconsistent
compliance procedures that agencies have established. He said the
report reflects the elements of EPA's implementation of section
610, and he also said EPA agreed with its general thrust that
agencies need more consistent guidance and coordination.
Specifically, he said EPA (1) agrees with the recommendation that
RISC clarify the Agenda's instructions concerning labeling of
section 610 reviews and (2) favors creating a new index that would
identify certain actions as the Results of Section 610 Reviews. He
said RISC's current indexing procedure creates confusion by mixing
forthcoming and completed reviews together without distinguishing
them from one another.

Regarding our second recommendation, the Director said a section
610 review is not a regulation and therefore cannot have a
SEISNSE. Nevertheless, he said EPA would welcome a consistent
policy from RISC on whether the Regulatory Flexibility Analysis
Required field refers to the current action or the underlying
rule.

However, the Director said he was concerned that relevant context
is missing from the discussion of many of EPA's actions that would
fundamentally alter the reader's evaluation of EPA's procedures.
He said EPA's entries make clear which ones comply with the
agency's responsibility to announce section 610 reviews in advance
and which ones

B-282127 Page 28 GAO/GGD-99-55 Regulatory Flexibility Act

carry out the agency's practice of informing the public that a
previously announced review is complete. He suggested (1) editing
the draft report to eliminate potentially misleading statements
that make it appear that EPA makes unsubstantiated claims about
its compliance with section 610 and (2) eliminating EPA's
announcements of completed reviews from our count of announcements
of forthcoming reviews that comply with the statute. He suggested
that we recommend procedures to identify rulemakings that are
developed as a result of section 610 reviews or to restrict such
notations.

We agree that the text of EPA's entries indicated that the agency
had completed its reviews. However, the Section 610 Review
notations after the titles of those entries and the placement of
those entries in an index of subsection 610( c) notice entries
also indicated that EPA was announcing forthcoming reviews. RISC
and OIRA notified EPA and the other agencies that any entries with
Section 610 Review after the title and entries in the Agenda's
section 610 review index would be regarded as subsection 610( c)
notices. 13 Therefore, EPA and the other agencies should have been
aware that these Section 610 Review entries could be interpreted
as announcements of forthcoming reviews. We do not believe that
EPA or the other agencies intended to mislead the public regarding
these reviews, and we have added a statement to that effect in our
conclusions in the final report. We also more clearly reflected
EPA's position regarding these issues, but did not change our
count of announcements of forthcoming reviews that comply with the
statute.

As agreed, unless you announce the contents of this report
earlier, we plan no further distribution until 30 days from the
date of this letter. At that time, we will send copies of this
report to Senator John F. Kerry, Ranking Minority Member of this
Committee; and Representative James M. Talent, Chairman, and
Representative Nydia M. Velazquez, Ranking Minority Member, House
Committee on Small Business. We are also sending copies to the
Honorable Jacob Lew, Director of OMB; the Honorable Donna E.
Shalala, Secretary of HHS; the Honorable Rodney E. Slater,
Secretary of

13 For example, OIRA's June 1997, January 1998, and June 1998
memorandum attachments describing guidelines and procedures for
publishing the Unified Agenda indicated that Section 610 Review
entries would be used to identify rules that your agency has
selected for review under section 610( c). For several editions of
the Agenda, RISC's instructions in the front of the Agendas
clearly stated that [ t] he notation Section 610 Review' following
the title indicates that the agency has selected the rule for its
periodic review of existing rules under the Regulatory Flexibility
Act (5 U. S. C. 610[ c]). Subsection 610( c) of the RFA requires
agencies to publish a list of rules which are to be reviewed.
Also, the introduction to the section 610 indexes in these Agenda
editions said an agency that uses the Section 610 Review notation
after the titles of certain entries indicates the rules that it
plans to review in the next year. The introduction also said, the
following index lists the regulatory actions for which agencies
included this designation.

B-282127 Page 29 GAO/GGD-99-55 Regulatory Flexibility Act

Transportation; the Honorable Robert E. Rubin, Secretary of the
Treasury; the Honorable Carol M. Browner, Administrator of EPA;
the Honorable Aida Alvarez, Administrator, SBA; and Ronald C.
Kelly, Acting Executive Director, RISC. We will make copies
available to others on request.

Major contributors to this report were Curtis Copeland, Assistant
Director; Theresa Roberson, Evaluator- in- Charge; and Alan N.
Belkin, Assistant General Counsel. Please contact me at (202) 512-
8676 if you or your staff have any questions.

Sincerely yours, L. Nye Stevens Director Federal Management

and Workforce Issues

Page 30 GAO/GGD-99-55 Regulatory Flexibility Act

Contents 1 Letter 32 Appendix I Comments From the Regulatory
Information Service Center

34 Appendix II Comments From the U. S. Environmental Protection
Agency

Table 1: Twelve Agencies Had at Least 10 Entries With a SEISNSE in
the April 1998 and November 1998 Editions of the Unified Agenda

13 Table 2: Six Agencies Generally Had at Least 10 Entries

With a SEISNSE in Previous Editions of the Unified Agenda

14 Tables

Contents Page 31 GAO/GGD-99-55 Regulatory Flexibility Act
Abbreviations

ANPRM Advance Notice of Proposed Rulemaking DOL Department of
Labor DOT Department of Transportation EPA Environmental
Protection Agency FCC Federal Communications Commission FTC
Federal Trade Commission HHS Department of Health and Human
Services IIRIRA Illegal Immigration Reform and Immigration
Responsibility Act of 1996 INS Immigration and Naturalization
Service NPRM Notice of Proposed Rulemaking OIRA Office of
Information and Regulatory Affairs OST Office of the Secretary of
Transportation RFA Regulatory Flexibility Act RISC Regulatory
Information Service Center RSPA Research and Special Programs
Administration (Transportation) SBA Small Business Administration
SEISNSE Significant Economic Impact on a Substantial Number of
Small Entities

Appendix I Comments From the Regulatory Information Service Center

Page 32 GAO/GGD-99-55 Regulatory Flexibility Act

Appendix I Comments From the Regulatory Information Service Center

Page 33 GAO/GGD-99-55 Regulatory Flexibility Act

Appendix II Comments From the U. S. Environmental Protection
Agency

Page 34 GAO/GGD-99-55 Regulatory Flexibility Act

Appendix II Comments From the U. S. Environmental Protection
Agency

Page 35 GAO/GGD-99-55 Regulatory Flexibility Act

Appendix II Comments From the U. S. Environmental Protection
Agency

Page 36 GAO/GGD-99-55 Regulatory Flexibility Act

Ordering Information The first copy of each GAO report and
testimony is free. Additional copies are $2 each. Orders should be
sent to the following address, accompanied by a check or money
order made out to the Superintendent of Documents, when necessary.
VISA and MasterCard credit cards are accepted, also. Orders for
100 or more copies to be mailed to a single address are discounted
25 percent.

Order by mail: U. S. General Accounting Office P. O. Box 37050
Washington, DC 20013

or visit: Room 1100 700 4 th St. NW (corner of 4 th and G Sts. NW)
U. S. General Accounting Office Washington, DC

Orders may also be placed by calling (202) 512- 6000 or by using
fax number (202) 512- 6061, or TDD (202) 512- 2537.

Each day, GAO issues a list of newly available reports and
testimony. To receive facsimile copies of the daily list or any
list from the past 30 days, please call (202) 512- 6000 using a
touch- tone phone. A recorded menu will provide information on how
to obtain these lists.

For information on how to access GAO reports on the INTERNET, send
e- mail message with info in the body to:

info@ www. gao. gov or visit GAO's World Wide Web Home Page at:
http:// www. gao. gov

United States General Accounting Office Washington, D. C. 20548-
0001

Official Business Penalty for Private Use $300

Address Correction Requested Bulk Rate

Postage & Fees Paid GAO Permit No. G100

(410411)

*** End of document. ***