Regulatory Reform: Agencies' Section 610 Review Notices Often Did Not
Meet Statutory Requirements (Testimony, 02/12/98, GAO/T-GGD-98-64).

GAO discussed its recent studies of federal agencies' attempts to use
the Unified Agenda of Federal Regulatory and Deregulatory Actions to
satisfy the notification requirements of the Regulatory Flexibility Act
(RFA) of 1980.

GAO noted that: (1) because of concerns about whether agencies' use of
the Unified Agenda satisfied the notification requirements in the RFA,
the Chairman of the Senate Committee on Small Business asked GAO to
review the November 1996 edition of the Agenda; (2) in GAO's April 1997
report resulting from that review it noted that, of the more than 4,600
entries in that edition of the Agenda, the agencies indicated that only
21 of them were section 610 reviews; (3) those 21 entries were from 3 of
the 59 agencies with actions listed in the Agenda--the Department of
Labor (DOL), the Department of Transportation (DOT), and the Small
Business Administration; (4) GAO examined all 21 of these entries and
concluded that none of them met all of the requirements that section 610
of the RFA established; (5) some of the entries involved rules that the
agencies said would not have a significant effect on small entities; (6)
because section 610 reviews are supposed to be conducted only for rules
that have a significant effect on small entities, these entries should
not have been identified as section 610 reviews; (7) GAO updated its
April 1997 report by examining the October 1997 edition of the Unified
Agenda; (8) in this latest edition of the Agenda, there were 34 entries
from 7 agencies with a Section 610 review notation following the title;
(9) more than half of these 34 entries were from DOT; (10) GAO reviewed
these 34 entries and concluded that 31 of them did not satisfy all of
the notification requirements in the RFA; (11) 15 of the 31 entries,
according to their plain text, did not involve rules that would have a
significant economic impact on a substantial number of small entities;
(12) 15 of the remaining 16 entries announced regulatory actions the
agencies had already taken or planned to take, not a review to determine
what actions to take; (13) three of the 34 entries in the October 1997
Unified Agenda that the agencies characterized as section 610 reviews--1
from DOL and 2 from DOT--did appear to satisfy all of the RFA's
notification requirements; (14) GAO's examination of those entries
indicated that satisfying the RFA's section 610 requirements does not
appear to be that difficult; (15) the agencies indicated that the rules
at issue would have an impact on small entities and stated that they
were planning to review the rules in the future; and (16) the agencies
described the rules, noted why they were needed, and identified an
agency contact to whom comments could be addressed.

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

 REPORTNUM:  T-GGD-98-64
     TITLE:  Regulatory Reform: Agencies' Section 610 Review Notices 
             Often Did Not Meet Statutory Requirements
      DATE:  02/12/98
   SUBJECT:  Reporting requirements
             Government publications
             Agency proceedings
             Federal regulations
             Regulatory agencies
             Government information dissemination
             Small business assistance

             
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Cover
================================================================ COVER


Before the Committee on Small Business
House of Representatives

For Release on Delivery
Expected at
10:00 a.m.  EST
Thursday
February 12, 1998

REGULATORY REFORM - AGENCIES'
SECTION 610 REVIEW NOTICES OFTEN
DID NOT MEET STATUTORY
REQUIREMENTS

Statement of
L.  Nye Stevens
Director, Federal Management and Workforce Issues
General Government Division

GAO/T-GGD-98-64

GAO/GGD-98-64T


(410264)


Abbreviations
=============================================================== ABBREV


REGULATORY REFORM:  AGENCIES'
SECTION 610 REVIEW NOTICES OFTEN
DID NOT MEET STATUTORY
REQUIREMENTS
==================================================== Chapter STATEMENT

Mr.  Chairman and Members of the Committee: 

I am pleased to be here today to discuss our recent studies of
federal agencies' attempts to use the Unified Agenda of Federal
Regulatory and Deregulatory Actions to satisfy the notification
requirements of the Regulatory Flexibility Act (RFA) of 1980. 
However, before I get into our specific findings, some background is
necessary regarding the RFA's notice requirements and the Unified
Agenda. 


   BACKGROUND
-------------------------------------------------- Chapter STATEMENT:1

Section 610 of the RFA requires each federal agency to develop a plan
for the periodic review of its rules that have or will have a
significant economic impact on a substantial number of small
entities.  The purpose of the review is to determine whether each
such rule should be continued without change, amended, or rescinded
to minimize its impact on small entities.  All rules in existance at
the time this section of the RFA became effective generally had to be
reviewed within 10 years, and any new rule must be reviewed within 10
years of the date it becomes final. 

As part of that review process, section 610 requires federal agencies
to publish annually in the Federal Register a list of their existing
rules that have a significant effect on small entities and that they
plan to review in the next year.  Agencies must describe these rules,
note why they are needed, and invite public comments on them. 
Therefore, section 610 of the RFA is essentially a notice requirement
that is designed to make it easier for the public to comment on the
impact of agencies' existing rules at a time when the greatest
opportunity exists for possible changes to those rules. 

Although the RFA does not require agencies to use the Unified Agenda
to publish the required notices, the Agenda is a convenient and
efficient mechanism by which agencies can do so.  The Unified Agenda
is published in the Federal Register twice each year and consolidates
information for the public on all regulatory activities under
development throughout the federal government.  As a result, the
agenda is extremely voluminous--typically covering more than 1,300
pages in the Federal Register.  Agencies use the Agenda to satisfy
several statutory and executive order notification requirements in
addition to the RFA's. 

Executive Order 12866 requires the Administrator of the Office of
Management and Budget's (OMB) Office of Information and Regulatory
Affairs (OIRA) to specify how federal agencies should prepare their
Unified Agenda entries.  The Regulatory Information Service Center
(RISC) within the General Services Administration compiles the Agenda
for OIRA and issues instructions to the agencies on how the entries
are to be prepared.  However, RISC does not review agencies' Agenda
entries to determine compliance with statutory or other requirements
before they are printed. 


   ENTRIES IN NOVEMBER 1996
   UNIFIED AGENDA OFTEN DID NOT
   MEET SECTION 610 REQUIREMENTS
-------------------------------------------------- Chapter STATEMENT:2

Because of concerns about whether agencies' use of the Unified Agenda
satisfied the notification requirements in the RFA, the Chairman of
the Senate Committee on Small Business asked us to review the
November 1996 edition of the Agenda.  In our April 1997 report
resulting from that review we noted that, of the more than 4,600
entries in that edition of the Agenda, the agencies indicated that
only 21 of them were section 610 reviews.\1 Those 21 entries were
from 3 of the 59 agencies with actions listed in the Agenda--the
Departments of Labor (DOL) and Transportation (DOT) and the Small
Business Administration (SBA). 

We examined all 21 of these entries and concluded that none of them
met all of the requirements that section 610 of the RFA established. 
Some of the entries involved rules that the agencies said would not
have a significant effect on small entities.  Because section 610
reviews are supposed to be conducted only for rules that have a
significant effect on small entities, these entries should not have
been identified as section 610 reviews.  Most commonly, however, the
three agencies had identified new rules they intended to issue or
changes they had already decided to make to existing rules, not
reviews of existing rules to determine whether changes were needed. 

To correct these deficiencies, we recommended that the OIRA
Administrator instruct agencies that choose to use the Unified Agenda
to satisfy the RFA notification requirements on what the statute
requires.  In response to our recommendation, the OIRA Administrator
issued that guidance to federal departments and agencies in June
1997. 

We also concluded in our April 1997 report that the size of the
Unified Agenda and the lack of any index or special section in the
document made the agencies' section 610 entries difficult for the
public to find and comment on.  We recommended that the Executive
Director of RISC develop an Agenda index that specifically identifies
the rules that agencies plan to review under section 610 so that the
public could comment on those rules.  RISC agreed to do so, and the
October 1997 edition of the Unified Agenda contained such an index
that listed, by agency, the entries the agencies said were section
610 reviews. 


--------------------
\1 Regulatory Flexibility Act:  Agencies' Use of the November 1996
Unified Agenda Did Not Satisfy Notification Requirements
(GAO/GGD/OGC-97-77R, Apr.  22, 1997). 


   ONLY THREE ENTRIES IN THE
   OCTOBER 1997 UNIFIED AGENDA
   SATISFIED SECTION 610
   REQUIREMENTS
-------------------------------------------------- Chapter STATEMENT:3

Mr.  Chairman, at your request we have updated our April 1997 report
by examining the October 1997 edition of the Unified Agenda.  We are
issuing our report to you today on the results of our review.\2

In this latest edition of the Agenda, there were 34 entries from 7
agencies with a "Section 610 Review" notation following the title. 
More than half of these 34 entries were from DOT. 

We reviewed these 34 entries and concluded that 31 of them did not
satisfy all of the notification requirements in the RFA.  The same
problems that were evident during our earlier review were again
prevalent.  Fifteen of the 31 entries, according to their plain text,
did not involve rules that would have a significant economic impact
on a substantial number of small entities.  Fifteen of the remaining
16 entries announced regulatory actions the agencies had already
taken or planned to take, not a review to determine what actions to
take.  For example, one of the Environmental Protection Agency's
"section 610" entries announced the pending publication of final
rules making more than 50 modifications, additions, and deletions to
its existing polychlorinated biphenyls management program.  This
entry did not involve notifying the public of an upcoming RFA review. 
The remaining entry did not satisfy the RFA requirement that the
agency describe the rule and state why it was needed. 


--------------------
\2 Regulatory Flexibility Act:  Agencies' Use of the October 1997
Unified Agenda Often Did Not Satisfy Notification Requirements
(GAO/GGD-97-61R, Feb.  12, 1998). 


      THREE ENTRIES SATISFIED ALL
      SECTION 610 REQUIREMENTS
------------------------------------------------ Chapter STATEMENT:3.1

Three of the 34 entries in the October 1997 Unified Agenda that the
agencies characterized as section 610 reviews--1 from DOL and 2 from
DOT--did appear to satisfy all of the RFA's notification
requirements.  Our examination of those entries indicated that
satisfying the RFA's section 610 requirements does not appear to be
that difficult.  The agencies indicated that the rules at issue would
have an impact on small entities and stated that they were planning
to review the rules (or continue to review them) in the future.  The
agencies described the rules, noted why they were needed, and
identified an agency contact to whom comments could be addressed. 


      CONCLUSIONS AND NEW
      RECOMMENDATION
------------------------------------------------ Chapter STATEMENT:3.2

The OIRA Administrator's June 1997 guidance to federal agencies on
how to use the Unified Agenda to satisfy the requirements of section
610 did not prevent agencies from continuing to mischaracterize
Agenda entries as section 610 reviews.  Those mischaracterizations,
combined with the Agenda index of entries that the agencies
characterized as section 610 reviews, can result in the public's
being misled about their ability to comment on RFA regulatory
reviews. 

Therefore, in our report being issued today, we recommend 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 the
RFA.  The RISC Executive Director and the Acting OIRA Administrator
told us that they agreed with the recommendation, and said that they
would explore ways to improve the Agenda's notice provisions. 


------------------------------------------------ Chapter STATEMENT:3.3

Mr.  Chairman, this completes my prepared statement.  I would be
pleased to answer any questions. 

*** End of document. ***