Congressional Review Act: Update on Implementation and Coordination
(Testimony, 06/17/98, GAO/T-OGC-98-55).

GAO discussed its experience in fulfilling its responsibilities under
the Congressional Review Act (CRA) and its efforts to coordinate
implementation of the Act with the Office of Management and Budget's
Office of Information and Regulatory Affairs (OIRA).

GAO noted that: (1) under CRA two types of rules, major and nonmajor,
must be submitted to both Houses of Congress and GAO before either can
take effect; (2) CRA specifies that the determination of what rules are
major is to be made by OIRA; (3) its primary role under CRA is to
provide Congress with a report on each major rule concerning GAO's
assessment of the promulgating federal agency's compliance with the
procedural steps required by various acts and executive orders governing
the regulatory process; (4) although the law is silent as to GAO's role
relating to the nonmajor rules, it believes that basic information about
the rules should be collected in a manner that can be of use to Congress
and the public; (5) to do this, GAO has established a database that
gathers basic information about the 15-20 rules GAO receives on the
average each day; (6) GAO conducted a review to determine whether all
final rules covered by CRA and published in the Federal Register were
filed with Congress and GAO; (7) the review, covering the 10-month
period from October 1, 1996, to July 31, 1997, identified 498 rules from
50 agencies that were not properly submitted for congressional review;
(8) GAO submitted the list to OIRA in November 1997; (9) OIRA
distributed this list to the affected agencies and instructed them to
contact GAO if they had any questions; (10) beginning in mid-February,
because 321 rules remained unfiled, GAO followed up with each agency
that had rules unaccounted for; (11) OIRA did not participate in the
follow-up effort; (12) GAO's office experienced varying degrees of
responses from the agencies during the followup; (13) GAO conducted a
second review covering the 5-month period from August 1, 1997, to
December 31, 1997; (14) GAO noted two areas of improvement: (a) the
number of unfiled rules which should have been filed were 66, down from
the 279 for the prior 10-month review, indicating a more concerted
effort by agencies to fulfill their responsibilities under CRA; and (b)
OIRA has become more involved and conducted the follow-up contacts with
agencies after distribution of the list; (15) while GAO is unaware of
any rule the OIRA deliberately misclassified to avoid the major rule
designation, mistakes have been made in major rule classifications; and
(16) the failure of agencies to identify some issuances as rules at all
has meant that some major rules have not been identified.

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

 REPORTNUM:  T-OGC-98-55
     TITLE:  Congressional Review Act: Update on Implementation and 
             Coordination
      DATE:  06/17/98
   SUBJECT:  Agency proceedings
             Reporting requirements
             Proposed legislation
             Congressional/executive relations
             Congressional oversight
             Legislative procedures
             Data bases
IDENTIFIER:  Federal Agency Major Rules
             
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Cover
================================================================ COVER


Subcommittee on National Economic Growth, Natural Resources, and
Regulatory Affairs, Committee on Government Reform and Oversight,
House of Representatives

For Release on Delivery
Expected at
2:00 p.m., EST
Wednesday,
June 17, 1998

CONGRESSIONAL REVIEW ACT - UPDATE
ON IMPLEMENTATION AND COORDINATION

Statement of Robert P.  Murphy, General Counsel

GAO/T-OGC-98-55

GAO/OGC-98-55T


(996216)


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

  OIRA - x
  CRA - x
  GAO - x
  APA - x
  HCFA - x
  IRS - x

============================================================ Chapter 0

Chairman McIntosh, Mr.  Tierney, and Members of the Subcommittee: 

I am pleased to appear before you today to discuss the General
Accounting Office's experience in fulfilling its responsibilities
under the Congressional Review Act (CRA) and our efforts to
coordinate implementation of the Act with the Office of Management
and Budget's Office of Information and Regulatory Affairs (OIRA). 

Since I testified before this Subcommittee on March 10, 1998, in some
areas we have seen enhanced cooperation from OIRA in implementing the
CRA.  In addition, executive branch and independent agencies appear
to be more cognizant of their responsibilities under the requirements
of the CRA.  However, there remain areas of concern.  After a brief
review of the operation of the statute, I will discuss what progress
has been made in four areas during the past 3 months. 

Under CRA two types of rules, major and nonmajor, must be submitted
to both Houses of Congress and the GAO before either can take effect. 
CRA defines a "major" rule as one which has resulted in or is likely
to result in (1) an annual effect on the economy of $100 million or
more; (2) a major increase in costs or prices for consumers,
individual industries, government agencies, or geographic regions; or
(3) significant adverse effects on competition, employment,
investment, productivity, innovation, or on the ability of U.S.-based
enterprises to compete with foreign-based enterprises in domestic and
export markets.  CRA specifies that the determination of what rules
are major is to be made by OIRA.  Major rules cannot be effective
until 60 days after publication in the Federal Register or submission
to Congress and GAO, whichever is later.  Nonmajor rules become
effective when specified by the agency, but not before they are filed
with the Congress and GAO. 

GAO's primary role under CRA is to provide the Congress with a report
on each major rule concerning GAO's assessment of the promulgating
federal agency's "compliance with the procedural steps" required by
various acts and executive orders governing the regulatory process. 
These include preparation of a cost-benefit analysis, when required,
and compliance with the Regulatory Flexibility Act, the Unfunded
Mandates Reform Act of 1995, the Administrative Procedure Act, the
Paperwork Reduction Act, and Executive Order No.  12866.  GAO's
report must be sent to the congressional committees of jurisdiction
within 15 calendar days. 

Although the law is silent as to GAO's role relating to the nonmajor
rules, we believe that basic information about the rules should be
collected in a manner that can be of use to Congress and the public. 
To do this, we have established a database that gathers basic
information about the 15-20 rules we receive on the average each day. 
Our database captures the title, the agency, the Regulation
Identification Number, the type of rule, the proposed effective date,
the date published in the Federal Register, the congressional review
trigger date, and any joint resolutions of disapproval that may be
enacted.  We have made this database available, with limited research
capabilities, on the Internet.  I will discuss shortly our belief
that this database would have more significant value to the Congress
if the executive branch agencies would cooperate with GAO and provide
additional information relevant to each rule. 

Since the congressional rulemaking review provisions of CRA were
enacted on March 29, 1996, our Office has received 131 major and
9,052 nonmajor rules from executive branch and independent agencies. 


   UNFILED RULES
---------------------------------------------------------- Chapter 0:1

As noted earlier, before a rule can become effective, it must be
filed in accordance with the statute.  Prior to the March 10 hearing,
GAO conducted a review to determine whether all final rules covered
by CRA and published in the Federal Register were filed with the
Congress and GAO.  We performed this review to both verify the
accuracy of our database and to ascertain the degree of agency
compliance with CRA. 

Our review covered the 10-month period from October 1, 1996, to July
31, 1997.  In November 1997, we submitted to OIRA a computer listing
of the rules that we found published in the Federal Register but not
filed with our Office.  This initial list included 498 rules from 50
agencies.  OIRA distributed this list to the affected agencies and
departments and instructed them to contact GAO if they had any
questions regarding the list.  Beginning in mid-February, because 321
rules remained unfiled, we followed up with each agency that still
had rules which were unaccounted for.  OIRA did not participate in
the follow-up effort. 

Our Office experienced varying degrees of responses from the
agencies.  Several agencies, notably the Environmental Protection
Agency and the Department of Transportation, took immediate and
extensive corrective action to submit rules that they had failed to
submit and to establish fail-safe procedures for future rule
promulgation.  Other agencies responded by submitting some or all of
the rules that they had failed to previously file.  Several agencies
are still working with us to assure 100 percent compliance with CRA. 
Some told us they were unaware of CRA or of the CRA filing
requirement. 

Overall, our review disclosed, as of the March 10 hearing, that: 

  -- 279 rules should have been filed with us; 264 of these have
     subsequently been filed;

  -- 182 were found not to be covered by CRA as rules of particular
     applicability or agency management and thus were not required to
     be filed;

  -- 37 rules had been submitted timely and our database was
     corrected; and

  -- 15 rules from six agencies had not been filed. 

As we noted at the hearing, we believe OIRA should have played a role
in ensuring that agencies were both aware of the CRA filing
requirements and were complying with them. 

Last week, our Office concluded a second review covering the 5-month
period from August 1, 1997, to December 31, 1997, which we conducted
in the same manner as the prior review. 

The initial list which we forwarded to OIRA on April 2 for
distribution to the concerned agencies contained 115 rules from 21
agencies.  On June 2, OIRA agreed to follow up with the agencies that
had not responded.  As of June 11, 45 of the 115 rules had been
filed; 25 were found not to be subject to CRA because they were rules
of particular applicability or agency management and 24 had been
previously timely submitted and our database was corrected. 
Twenty-one rules from eight agencies remain unfiled. 

I would like to point out two areas which show improvement.  First,
the number of unfiled rules which should have been filed were 66 for
the 5-month period.  This is down markedly from the 279 for the prior
10-month review, thus indicating a more concerted effort on the part
of the agencies to fulfill their responsibilities under CRA. 
Secondly, OIRA has become more involved and conducted the follow-up
contacts with the agencies after OIRA's distribution of the initial
list. 


   SIXTY-DAY DELAY AND "GOOD
   CAUSE"
---------------------------------------------------------- Chapter 0:2

Some agencies failed to delay the effective date of some major rules
for 60 days as required by section 801(a)(3)(A) of the Act.  At the
time of my prior testimony, the effective date of eight major rules
had not been delayed.  Agencies were not budgeting enough time into
their regulatory timetable to allow for the delay and were
misinterpreting the "good cause" exception to the 60-day delay period
found in section 808(2). 

Section 808(2) states that, notwithstanding section 801, "any rule
which an agency for good cause finds (and incorporates the finding
and a brief statement of reasons therefor in the rule issued) that
notice and public procedure thereon are impracticable, unnecessary,
or contrary to the public interest" shall take effect at such time as
the federal agency promulgating the rule determines.  This language
mirrors the exception in the Administrative Procedure Act (APA) to
the requirement for notice and comment in rulemaking.  5 U.S.C.  ï¿½
553(b)(3)(B).  In our opinion, the "good cause" exception is only
available if a notice of proposed rulemaking was not published and
public comments were not received.  Many agencies, following a notice
of proposed rulemaking, have stated in the preamble to the final
major rule that "good cause" existed for not providing the 60-day
delay.  Examples of reasons cited for the "good cause" exception
include (1) that Congress was not in session and thus could not act
on the rule, (2) that a delay would result in a loss of savings that
the rule would produce, or (3) that there was a statutorily mandated
effective date. 

The former administrator of OIRA disagreed with our interpretation of
the statutory "good cause" exception.  She believed that this
interpretation would result in less public participation in
rulemaking because agencies would forgo issuing a notice of proposed
rulemaking and receipt of public comments in order to invoke the CRA
"good cause" exception.  OIRA contends that the proper interpretation
of "good cause" should be the standard employed for invoking section
553(d)(3) of the APA, "as otherwise provided by the agency for good
cause found and published with the rule," for avoiding the 30-day
delay in a rule's effective date required under the APA. 

Since CRA's section 808(2) mirrors the language in section 553(b)(B),
not section 553(d)(3), it is clear that the drafters intended the
"good cause" exception to be invoked only when there has not been a
notice of proposed rulemaking and comments received. 

In the last 3 months, our Office has not reviewed a major rule that
did not properly comply with the 60-day delay requirement.  Also, the
"good cause" exception has been properly employed in those instances
where no notice of proposed rulemaking was issued or comments
received.  Finally, agencies are alerting the public, in the final
rule publication in the Federal Register, that the 60-day effective
date stated in the rule may be delayed due to the need to comply with
the CRA.  The Health Care Financing Administration (HCFA) of the
Department of Health and Human Services, in a recent Medicare rule,
contained such a notice, and since HCFA's submission of the rule was
5 days later than the publication of the rule in the Federal
Register, the effective date was delayed in accordance with the CRA. 


   DEFINITIONS OF RULES AND MAJOR
   RULES
---------------------------------------------------------- Chapter 0:3

One early question about implementation of CRA was whether executive
agencies or OIRA would attempt to avoid designating rules as major
and thereby avoid GAO's review and the 60-day delay in the effective
date.  While we are unaware of any rule that OIRA deliberately
misclassified to avoid the major rule designation, mistakes have been
made in major rule classifications.  Also, the failure of agencies to
identify some issuances as "rules" at all has meant that some major
rules have not been identified. 

CRA contains a broad definition of "rule," including more than the
usual "notice and comment" rulemakings under the Administrative
Procedure Act which are published in the Federal Register.  "Rule"
means the whole or part of an agency statement of general
applicability and future effect designed to implement, interpret, or
prescribe law or policy. 

Recently, we compared an OIRA-prepared list of important final rules
that it reviewed during the first year of the CRA to the list of
rules that OIRA and the agencies had identified to us as major during
the same period.  We found that 12 rules on our list of major rules
were not on OIRA's list.  OIRA officials said that, in retrospect,
they and the agencies should not have identified 7 of those 12 rules
as major.  The OIRA list also contained 8 rules that were not on our
list of 122 major rules.  Of these, OIRA officials said that all
eight should have been identified and submitted to us as major rules. 
OIRA officials noted that all of these rules were issued in the first
year of the congressional review process, and that they and the
agencies were still learning how to respond to the statutory
requirements.  We are currently following up with OIRA and the
agencies that issued these rules to determine whether they should be
added to or subtracted from our list of major rules. 

As I noted in my prior testimony, on occasion, our Office has been
asked whether certain agency action, issuance, or policy constitutes
a "rule" under CRA such that it would not take effect unless
submitted to our Office and the Congress in accordance with CRA.  For
example, in response to a request from the Chairman of the
Subcommittee on Forests and Public Land Management, Senate Committee
on Energy and Resources, we concluded that a memorandum issued by the
Secretary of Agriculture in connection with the Emergency Salvage
Timber Sale Program constituted a "rule" under CRA and should have
been submitted to the Houses of Congress and GAO before it could
become effective. 

Likewise, we concluded that the Tongass National Forest Land and
Resource Management Plan issued by the United States Forest Service
was a "rule" under CRA and should have been submitted for
congressional review.  There are 123 forest plans covering all 155
forests in the National Forest System.  Each plan must be revised and
reissued every 10 years. 

OIRA stated that, if the plan was a rule, it would be a major rule. 
In testimony before the Senate Committee on Energy and Natural
Resources and the House Committee on Resources regarding the Tongass
Plan, the Administrator of OIRA stated that, as was the practice
under the APA, each agency made its own determination of what
constituted a rule under CRA and by implication, OIRA was not
involved in these determinations. 

We continue to believe that for CRA to achieve what the Congress
intended, OIRA must assume a more active role in guiding or
overseeing these types of agency decisions.  Other than an initial
memorandum following the enactment of CRA, we are unaware of any
further OIRA guidance.  Because each agency or commission issues many
manuals, documents, and directives which could be considered "rules"
and these items are not collected in a single document or repository
such as the Federal Register, it is difficult to ascertain if
agencies are fully complying with CRA. 

We note certain congressional committees are taking an active role in
overseeing agency compliance with the CRA.  For example, the Joint
Committee on Taxation has corresponded with the Internal Revenue
Service (IRS) as to what should be submitted.  Therefore, IRS
procedures, rulings, regulations, notices, and announcements are
forwarded as CRA submittals.  Also, in response to the request of the
House Committee on Education and the Workforce, the Departments of
Labor and Education deliver their CRA submissions with a monthly
summary directly to the Committee, in addition to our Office and both
Houses of Congress as required by the CRA. 


   DATABASE ENHANCEMENT
---------------------------------------------------------- Chapter 0:4

As we discussed at your March hearing, we have attempted to work with
executive agencies to get more substantive information about the
rules and to get such information supplied in a manner that would
enable quick assimilation into our database.  An expansion of our
database could make it more useful not only to GAO for its use in
supporting congressional oversight work, but directly to the Congress
and to the public. 

In the initial development of the questionnaire, we consulted with
executive branch officials to insure that the requested information
would not be unnecessarily burdensome.  We circulated the
questionnaire for comment to 20 agency officials with substantial
involvement in the regulatory process, including officials from OIRA. 
The Administrator of OIRA submitted a response in her capacity as
Chair of the Regulatory Working Group, consolidating comments from
all the agencies represented in that group.  It was the position of
the group that the completion of this questionnaire for each of the
4,000 to 5,000 rules filed each year is too burdensome for the
agencies concerned. 

On April 22 of this year we again contacted OIRA officials with a
modified version of our questionnaire, which we believed addressed
the major concerns raised with the initial version.  We have
subsequently met with officials from OIRA and a select group of
executive agency officials, at their request, to explore additional
ways to capture the information.  We are currently reviewing an
alternative, but we believe inadequate, version of the questionnaire
proposed by those officials and will meet next week to continue
negotiations on this matter. 

We continue to believe that it would further the purpose of CRA for a
database of all rules submitted to GAO to be available for review by
Members of Congress and the public and to contain as much information
as possible concerning the content and issuance of the rules.  We
believe that further talks with the executive branch, led by OIRA,
can be productive and that there may be alternative approaches that
address both congressional and executive branch concerns. 


   CONCLUSION
---------------------------------------------------------- Chapter 0:5

CRA gives the Congress an important tool to use in monitoring the
regulatory process, and we believe that the effectiveness of that
tool can be enhanced.  Executive Order 12866 requires that OIRA,
among other things, provide meaningful guidance and oversight so that
each agency's regulatory actions are consistent with applicable law. 
After 2 years' experience in carrying out our responsibilities under
the Act, we can suggest several areas in which OIRA should exercise
more leadership within the executive branch regulatory community,
consistent with the intent of the Executive Order, to enhance CRA's
effectiveness and its value to the Congress and the public.  We
believe that OIRA should: 

  -- develop a standardized reporting format that can readily be
     incorporated into GAO's database providing the information of
     most use to the Congress, the public, and GAO;

  -- establish a system to monitor compliance with the filing
     requirement on an ongoing basis; and

  -- provide clarifying guidance as to what is a rule that is subject
     to CRA and oversee the process of identifying such rules. 

Thank you, Mr.  Chairman.  This concludes my prepared remarks.  I
would be happy to answer any questions you may have. 


*** End of document. ***