1

 Table of Contents 

Executive Summary.........................................................................................................................3

PART 1: Report to Congress on the Costs and Benefits of Federal Regulations .....................6 

Chapter I: Regulatory Policy Under the Bush Administration—The First Year ....................6 

 A. The Regulatory Response to September 11th ...................................................................7 

 B. An Open Approach to Centralized Regulatory Oversight ...............................................11 

 C. Gatekeeper for New Rulemakings ...................................................................................14 

 D. Greater Use of Formal, Independent, External Peer Review...........................................20 

 E. Proactive Role in Establishing Regulatory Priorities .......................................................21 

 F. Overseer of the Quality of Information and Analysis ......................................................24 

 G. Expanded and Diversified Professional Staff ..................................................................30 

 H. Facilitator of Agency Reviews of Existing Rules............................................................32 

 I. Formation of a Scientific Advisory Panel to OIRA .........................................................34 

 J. Agency Compliance with the Unfunded Mandates Reform Act......................................34 

 K Summary Statistics on the Bush Administration’s Regulatory Record ...........................35 

Chapter II: The Costs and Benefits of Federal Regulations.......................................................36

A. Estimates of the Total Costs and Benefits of Regulations Reviewed by OMB...............36 

 B. Impacts of Federal Regulations........................................................................................41 

 C. Estimates of Benefits and Costs of This Year’s “Major” Rules ...................................46 

Chapter III: Regulatory Governance Abroad .............................................................................64 

 A. OECD Activities ..............................................................................................................64 

 B. APEC Activities ...............................................................................................................66 

 C. EC Activities ....................................................................................................................66 

Chapter IV. Recommendations for Reform .................................................................................70

 A. Review of Regulations, Paperwork, and Regulatory Programs.......................................70 

 B. Review of Problematic Agency Guidance .......................................................................72 

 C. Responses to OMB’s Request for Regulatory Reforms...................................................75 

 D. Process for Evaluating Reform Nominations...................................................................77 

 E. Next Steps.........................................................................................................................84 
2

Appendix...........................................................................................................................................86 

 A Impact of the Card Memorandum.....................................................................................86 

 B. Key to Public Comments..................................................................................................92 

 C. Status of the 23 High-Priority Rules OIRA Suggested For Reform in 2001 ...................104 

 D. Regulations Reviewed By Agency, 1998 to 2001 ...........................................................107 

 E. Calculations of Costs and Benefits: Explanation .............................................................108 

 F. The “Regulatory Right-To-Know Act” ............................................................................116 

 

PART 2: Seventh Annual Report to Congress on Agency Compliance with the 

Unfunded Mandates Reform Act of 1995 ......................................................................................117 

Chapter I. Background...................................................................................................................117 

Chapter II. Agency Consultation Activities .................................................................................120

Chapter III. A Review of Significant Regulatory Mandates.......................................................161 

 
3

 

Stimulating Smarter Regulation: 

Report to Congress on the Costs and Benefits of Federal Regulations and 

Unfunded Mandates on State, Local, and Tribal Entities 

EXECUTIVE SUMMARY

This Final Report to Congress on regulatory policy was prepared in response to the 

Regulatory Right-to-Know Act1

 and the Unfunded Mandates Reform Act2. The Report provides: 

(a) a summary of Federal regulatory actions taken due to the tragic events of September 11th and 

their aftermath, (b) an overview of the Office of Information and Regulatory Affairs’ (OIRA) 

activities; (c) an accounting statement of the costs and benefits of Federal regulations, including 

assessments of their impact on State, local and tribal governments, small businesses, wages and 

economic growth; (d) a summary of regulatory reform activities in other developed countries, 

with a particular focus on the European Union; and (e) a discussion of nominations of regulatory 

improvements from approximately 1,700 public comments. This Final Report reflects revisions 

made to a Draft Report that was subjected to public comment, external peer review, and 

interagency review. 

The major features and findings of the Report include: 

1. Since September 11th, OIRA has cleared 58 significant Federal regulations aimed at 

responding to the terrorist attacks. These rules addressed urgent matters such as 

homeland security, immigration control, airline safety, and the need for assistance to 

businesses harmed by the resulting economic disaster. 

2. OIRA’s goals in regulatory oversight include openness, promptness, and analytic 

rigor. OIRA’s website has regular updates on rules under review, meetings with outside 

parties, and key letters and memoranda to agencies. The number of OIRA reviews 

consuming more than the allotted 90 days has declined from what had regularly been 15-

20 rules at any given time to near zero in recent months. From July 1, 2001, to March 1, 

2002, OIRA returned more than 20 rules to agencies for reconsideration, more than the 

total number of rules returned to agencies during the entire Clinton Administration. 

Inadequate analysis by agencies was the most common reason for returns. The absence 

of returns in recent months (March 2002 to September 2002) reflects better 

communication between OMB and agencies and increased quality in rulemaking 

packages. 

 3. OIRA has developed the “prompt letter” for suggesting promising regulatory and 

informational priorities for agency consideration. OIRA’s initial six prompt letters have 

addressed a range of issues at five different agencies, including the use of lifesaving 

defibrillators in the workplace, food labeling requirements for trans-fatty acids, and better 

1

31 U.S.C. § 1105 note, Pub. L. 106-554, ' 1(a) (3) [Title VI, ' 624], Dec. 21, 2000, 114 Stat. 2763, 2763A-161 2

P.L. 104-4, Title II 
4

information regarding the environmental performance of industrial facilities. Agencies 

have performed independent assessments of each of these suggestions and adopted 

reasonable responses. 

4. Pursuant to statutory mandate, OIRA has issued government-wide guidelines to 

enhance the quality of information that Federal agencies disseminate to the public. OIRA 

worked with agencies to finalize their guidelines prior to the October 1, 2002, statutory 

deadline. These guidelines offer a new opportunity for affected members of the public to 

request corrections when poor quality information is disseminated or used to justify new 

regulations or other policies. OMB has directed each agency to develop an 

administrative mechanism to resolve these requests, including an independent appeals 

mechanism. 

5. The report summarizes regulatory reform activities now underway in developed 

countries throughout the world, with special focus on the European Union. The 

European Commission has recently issued an Action Plan for Better Regulation that 

includes expanded transparency, consultation with stakeholders, and more rigorous 

regulatory impact analysis. 

6. OIRA examined major Federal regulations cleared from April 1, 1995 to September 

30, 2001 to determine their quantifiable benefits and costs. The estimated annual benefits 

range from $48 billion to $102 billion, while the estimated costs range from $50 billion to 

$53 billion. Based on the information released in previous reports, the total costs and 

benefits of all Federal rules now in effect (major and non-major, including those adopted 

more than 10 years ago) could easily be a factor of ten or more larger than the sum of the 

costs and benefits reported here. More research is necessary to provide a stronger 

analytic foundation for comprehensive estimates of total costs and benefits by agency and 

program. OMB’s examination of the benefits and costs of Federal regulation supports the 

need for a common-sense approach to modernizing Federal regulation that involves the 

expansion, modification, and rescission of regulatory programs, as appropriate. 

7. In response to an open, invitational process of regulatory reform proposals, OIRA 

received public suggestions on 316 regulations and guidance documents covering 26 

Federal agencies. This number of public nominations is over four times larger than the 

71 nominations received in 2001 and covers a broader range of topics. This year’s 

commenters are also more diverse in organizational affiliation. As requested, this year’s 

public reform nominations include suggestions to review existing paperwork 

requirements and guidance documents, as well as to add, modify, or rescind regulations. 

This report provides a summary of these nominations and describes a review process in 

which agencies should consider the nominations and identify those that are worthy 

reforms. This year’s review process is different from last year’s process, when OIRA 

identified high priority reform candidates. Rather than suggest any specific agency 

priorities, OIRA is forwarding all of the public’s suggestions, with the expectation that 

agencies will make decisions about which, if any, reforms to pursue based on their 

assessment of the prospects and practicality of achieving regulatory improvements. 
5

8. The Bush Administration is concerned about unfunded mandates that impact State and 

local governments. The scope of consultation activities undertaken by Federal agencies 

such as Agriculture and Justice demonstrate the Bush Administration's commitment to 

building strong relationships with our governmental partners. Federal agencies are now 

actively consulting with States, localities, and tribal governments. 

9. Small businesses play a vital role in creating jobs and stimulating growth despite their 

disproportionate share of regulatory costs and burdens. The report contains numerous 

constructive suggestions on how agencies can reduce unnecessary regulations and 

paperwork requirements that impose especially large burdens on small business. 

OMB has already begun to prepare the 2003 Report to Congress on the Costs and 

Benefits of Regulation. Our objective is to publish the draft 2003 Report to Congress with the 

new Federal budget, thereby starting earlier the annual processes of public comment, external 

peer review, and interagency review. 
6

 

PART 1: Report to Congress on the Costs and Benefits of Federal Regulations 

CHAPTER I: REGULATORY POLICY UNDER 

THE BUSH ADMINISTRATION—THE FIRST YEAR 

Federal regulation is a fundamental instrument of national policy. It is one of the three 

major tools—in addition to spending and taxing—used to implement policy. It is used to 

advance numerous public objectives, including homeland security, environmental protection, 

food safety, transportation safety, quality health care, equal employment opportunity, energy 

security, educational quality, immigration control and consumer protection. Yet, regulation also 

is costly. The exact cost of regulation is uncertain, but the total cost is large—yet often hidden—

from public view. To the extent regulation increases the cost of producing goods and services in 

the economy, it raises prices to the consumer. In addition to diminishing the purchasing power 

of consumers, regulation can create potential competitive problems for U.S. firms in a global 

economy, exacerbate fiscal challenges to State and local governments, and place small 

businesses, jobs, and wages at risk. 

Regulatory policy does not lend itself to simple answers. The underlying scientific and 

economic issues often are complex. There may be difficult tradeoffs between laudable social 

objectives. Success often hinges on the details about how a rule is designed, implemented and 

enforced. 

The Bush Administration supports Federal regulations that are sensible and based on 

sound science, economics, and the law. Through OMB’s Office of Information and Regulatory 

Affairs (OIRA), the Administration is striving for a regulatory process that adopts new rules 

when necessary to serve the public interest, simplifies and modifies existing rules to make them 

more effective and/or less costly or less intrusive, and rescinds outmoded rules whose benefits do 

not justify their costs. In pursuing this agenda, OIRA has pursued an approach based on the 

principles of regulatory analysis and policy espoused in Executive Order 12866, signed by 

President Clinton in 1993.3

 

The regulatory process improvements described below, while generally procedural in 

nature, promise to have a powerful positive long term effect on the quality of Federal regulation. 

With regard to Federal regulation, the Bush Administration’s objective is quality, not quantity. 

Those rules that are adopted promise to be more effective, less intrusive, and more cost-effective 

in achieving national objectives while demonstrating greater durability in the face of political 

and legal attack. 

One of OIRA’s most important functions is coordinating the President’s regulatory 

policy. As discussed in last year’s annual report to Congress, the first regulatory action taken by 

the Bush Administration was the issuance of the “Card Memorandum,” a January 20, 2001 

3

Regulatory Planning and Review, September 30, 1993 (58 FR 51735, October 4, 1993), as amended, E.O. 13258, 

Amending Executive Order 12866 on Regulatory Planning and Review, February 26, 2002 (67 FR 9385, February 

28, 2002).
7

directive from the President’s Chief of Staff, Andrew H. Card, Jr., to agency heads. The 

memorandum directed the agencies to take steps to ensure that policy officials in the incoming 

Administration had the opportunity to review any new or pending regulations. In last year’s 

report, we provided a summary of actions taken by agencies pursuant to the review called for in 

the Card memo, and by a subsequent OMB memorandum to agencies. In Appendix A of this 

report, we provide an update of these actions. 

A. The Regulatory Response to September 11th

After the shocking terrorist attacks of September 11, 2001, the American public looked to 

the Federal government to take action not only to prevent future security threats but also to 

provide relief for individuals affected by the tragedies. In response, the Federal government 

revisited its current practices and procedures, and sought solutions to address these concerns. 

Several agencies, including the Departments of Justice, Transportation, Labor, Health and 

Human Services, Commerce, the Office of Personnel Management, the Small Business 

Administration, and the Office of Management and Budget issued new regulations. In the year 

following September 11th, Federal agencies issued 58 significant new regulations in response to 

the attacks (see Table 1).

Table 1. Regulations Responding to the Terrorist Attacks of September 11, 2001 

(As of September 11, 2002.) 

Agency Title Rulemaking Stage

DOC India and Pakistan: Lifting of Sanctions, Removal of Indian and 

Pakistani Entities, and Revision in License Review Policy 

Final Rule 

DOJ National Security: Prevention of Acts of Violence and 

Terrorism 

Interim Final Rule 

DOJ September 11th Victim Compensation Fund of 2001 Prerule 

DOJ September 11th Victim Compensation Fund of 2001 Interim Final Rule 

DOJ September 11th Victim Compensation Fund of 2001 Final Rule 

DOJ Screening of Aliens and Other Designated Individuals Seeking 

Flight Training 

Interim Final Rule 

DOJ Screening of Aliens and Other Designated Individuals Seeking 

Flight Training 

Proposed Rule 

DOJ/INS Custody Procedures Interim Final Rule 

DOJ/INS Review of Custody Determinations Interim Final Rule 

DOJ/INS Limiting the Period of Admission for B Nonimmigrant Aliens 

(Section 610 Review) 

Proposed Rule 

DOJ/INS Requiring Change of Status from B to F-1 or M-1 

Nonimmigrant Prior to Pursuing a Course of Study 

Interim Final Rule 

DOJ/INS Requiring Aliens Ordered Removed from the United States to 

Surrender to the INS for Removal 

Proposed Rule 

DOJ/INS Retention and Reporting of Information for F, J, and M 

Nonimmigrants; SEVIS 

Proposed Rule 

DOJ/INS Release of Information Regarding INS Detainees in NonFederal Facilities Interim Final Rule 

DOJ/INS Registration and Monitoring of Certain Nonimmigrants Proposed Rule 
Table 1. Regulations Responding to the Terrorist Attacks of September 11, 2001 

(As of September 11, 2002.)

Agency Title Rulemaking Stage

DOJ/INS Allowing Eligible Schools to Apply for Preliminary Enrollment

in the Student and Exchange Visitor Information System

(SEVIS) 

Interim Final Rule 

DOJ/INS Registration and Monitoring of Certain Nonimmigrants Final Rule 

DOJ/INS Reduced Course Load for Certain F and M Nonimmigrant

Students in Border Communities 

Interim Final Rule 

DOJ Protective Orders in Immigration Administrative Proceedings Interim Final Rule

DOL Disaster Unemployment Assistance Program Amendment Interim Final Rule 

DOT/FAA Screening of Checked Baggage on Flights within the U.S. Final Rule 

DOT/FAA Aircraft Security under General Operating and Flights Rules Final Rule 

DOT/FAA Flight Crew Compartment Access and Door Designer Final Rule

DOT/FAA Flight Crew Compartment Access and Door Designs Final Rule

DOT/FAA Criminal History Background Checks Final Rule 

DOT/FAA Security Screeners: Qualifications, Training, and Testing Other 

DOT/FAA Security Considerations in the Design of the Flight deck on

Transport Category Airplanes 

Other 

DOT/FRA U.S. Locations Requirement for Dispatching of United States 

Rail Operations 

Interim Final Rule 

DOT Procedures for Compensation of Air Carriers (Emergency Rule) Final Rule 

DOT Procedures for Compensation of Air Carriers Final Rule

DOT/TSA* Imposition and Collection of Passenger Civil Aviation Security 

Fees in the Wake of September 11, 2001

Other 

DOT/TSA Aviation Security Infrastructure Fees Interim Final Rule 

DOT/TSA Security Programs for Aircraft With a Maximum Certificated 

Takeoff Weight of 12,500 Pounds or More 

Interim Final Rule 

DOT/TSA Civil Aviation Security Rules Interim Final Rule 

DOT/TSA Private Charter Security Rules Final Rule 

DOT/FAA Airspace and Flight Operations Requirements for the 2002 

Winter Olympic Games, Salt Lake City, UT

Final Rule 

DOT/FAA Procedures for Reimbursement of Airports, On-Airport Parking 

Lots and Vendors of On-Airfield Direct Services to Air Carriers 

for Security Mandates 

NPRM

DOT/FAA Firearms, Less-Than-Lethal Weapons, and Emergency Services 

on Commercial Air Flights 

Request for comments 

DOT/FAA Temporary Extension of Time Allowed for Certain Training

and Testing

Final Rule 

DOT/FAA Security control of Air Traffic Final Rule; request for 

comments

DOT/FAA Temporary Flight Restrictions Final Rule 

HHS/SAMSA Substance Abuse and Mental Health Services Administration

Mental Health and Substance Emergency Response Criteria

Interim Final Rule 

OMB Regulation for Air Carrier Guarantee Loan Program Final Rule 

OPM Absence and Leave Use of Restored Annual Leave Interim Final Rule 

OPM Absence and Leave Use of Restored Annual Leave Final Rule 

8
Table 1. Regulations Responding to the Terrorist Attacks of September 11, 2001 

(As of September 11, 2002.)

Agency Title Rulemaking Stage

OPM Administratively Uncontrollable Overtime Pay Interim Final Rule 

SBA Size Standards; Inflation Adjustment Interim Final Rule 

SBA Disaster Loan Program Interim Final Rule 

SBA 

 

Small Business Size Standards; Economic Injury Disaster Loan

Program

Interim Final Rule 

SBA Small Business Size Standards; Travel Agencies Interim Final Rule 

SBA 

 

Small Business Size Standards; Travel Agencies; Economic

Injury Disaster Loan Program

Final Rule (N/C) 

Treasury/FinCEN Amendment to the Bank Secrecy Act Regulations Interim Final Rule 

Treasury/FinCEN Proposed Amendment to the Bank Secrecy Act Regulations NPRM 

Treasury/FinCEN Cooperative Efforts to Deter Terrorist Financing and Money

Laundering 

Temporary Rule and 

NPRM

Treasury Counter Money Laundering Requirements -- Correspondent

Accounts with Foreign Shell Banks; Recordkeeping Related to 

Foreign Banks with Correspondent Accounts

Temporary Rule and 

NPRM

Treasury/IRS Special Form 720 Filing Rule Final Rule without 

NPRM

Treasury and Banking

Agencies** 

Identity Verification Program NPRM 

VA Exceptions to Definition of Date of Receipt Based on Special or 

Unforeseen Circumstances 

Final Rule 

*Transportation Security Agency 

** Office of Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit

Insurance Corporation, Office of Thrift Supervision, and National Credit Union 

As an integral part of the expedited issuance of these rules, OIRA conducted its full 

regulatory review and coordination function under Executive Order 12866. OIRA ensured that 

all affected agencies were aware of what other agencies were proposing and facilitated their 

timely comments on the proposed actions. These efforts made sure that all rules related to 

September 11th received priority attention from the appropriate reviewers, and that the 

Administration’s best solutions to the circumstances caused by the terrorist attacks were 

implemented. 

The Administration issued two types of rules in response to the events of September 11th. 

The first improves and strengthens national security. The second directs relief to the individuals 

and businesses affected by the attacks.

Protecting National Security 

The Department of Justice promulgated several rules that addressed the need for 

heightened security at home. One new Justice rule involved the monitoring of communications 

between inmates and their attorneys or their agents, where the Attorney General has determined 

that such actions are reasonably necessary in order to deter future acts of violence or terrorism, 

and upon a specific notification to the inmate and attorneys involved. Under the rule, a privilege 

9
10

team of individuals not involved in the underlying investigation would sift through the attorneyclient communications. The privilege team would disclose information to the investigators and 

prosecutors only upon approval of a Federal judge, unless the team leader determined that acts of 

violence or terrorism are imminent. 

 On the immigration side, the Department of Justice and the Immigration and 

Naturalization Service (INS) issued rules signaling the need for tighter security when handling 

aliens. INS established an automatic stay of the judge’s decision in cases where the individual is 

ordered to be released, allowing INS to continue to detain the alien while it appeals the decision. 

An additional INS rule extended the period an individual can be held in custody after his or her 

initial arrest. This rule afforded the INS additional time to run background security clearances 

on individuals to determine whether they were security risks. Other immigration rules issued 

seek to provide the INS with greater control of the flow of and greater information regarding 

nonimmigrant aliens in and out of the United States. 

 Within the Department of Transportation, the Federal Aviation Administration (FAA) 

and the Transportation Security Administration issued over a dozen rules in three key areas: 

flight-deck security requirements, background checks, and flight rules. In order to improve 

security on aircrafts, the FAA issued a series of rules to facilitate the strengthening of cockpit 

doors and locks to protect against unauthorized access to the cockpit. FAA also issued an 

interim final rule to require more permanent measures such as the replacement of cockpit doors. 

In addition, in order to fund enhanced security measures such as airport screener services, a rule 

was promulgated that allowed for a $2.50 security fee per segment traveled, with a maximum of 

$10.00 per round trip. The fee is to be used for enhanced security protections. In the other two 

categories of rules, the FAA promulgated several regulations regarding criminal history 

background checks, security procedures and screening of passengers, and screening of checked 

baggage. 

 The Treasury Department issued a series of rules to tighten the security of financial 

banking and established procedures to identify suspicious transactions as part of the counter 

money-laundering program. In addition, with the need to deter the financing of terrorist acts, the 

Treasury issued a rule permitting information sharing among financial institutions and the 

Federal government. 

Post-Attack Assistance 

The second category of rules promulgated seeks to provide assistance to individuals and 

businesses affected by the September 11th attacks. The President signed the “September 11th 

Victim Compensation Fund of 2001” into law as Title IV of the Air Transportation Safety and 

System Stabilization Act. The Act authorizes compensation to any individual (or the personal 

representative of a deceased individual) that was physically injured or killed as a result of the 

terrorist-related aircraft crashes on that day. The Victims Compensation Fund is designed to 

provide a no-fault alternative to tort litigation for these individuals. This regulation established 

procedural rules for administration of the Victims Compensation Fund. 
11

 

 FAA issued a rule that set forth procedures for the allocation of approximately $5 billion 

in compensation to air carriers affected by the events of September 11th. The Department of 

Labor issued a rule regarding disaster relief for individuals unemployed as a result of the attacks, 

clarifying eligibility requirements. In addition, the Office of Personnel Management (OPM) set 

forth a rule to assist agencies dealing with individuals who were forced to take leave during the 

national emergency and risked losing annual leave time. A second OPM regulation clarified 

technical procedures on compensation of individuals whose work is now related to the 

September 11th tragedy and recent security concerns. This would include law enforcement 

officials who have been temporarily reassigned work in response to recent national emergency 

declaration. Finally, the Small Business Administration set forth rules on disaster loan programs 

and inflation that may occur as a result of the terrorist attacks and economic downturns. 

The Federal government has sought, since the events of September 11th, to address the 

need for heightened national security in addition to assistance for disaster victims. Regulatory 

action summarized above occurred in the months soon after the attacks, allowing for solutions to 

be implemented expeditiously. Coordination of the Federal government is necessary to ensure 

consistency, efficiency, and effectiveness in our efforts to protect the nation’s security. 

 

Response to Public Comment4

One commenter (79) expressed concern that some of the rules responding to the events of 

September 11th may have been adopted under duress, and that these rules therefore deserve 

special priority for ex post review to make sure they are economically reasonable. Another 

commenter (85) requested more information on the economic impact of anti-terrorism rules. 

Since many of these rules were not judged to be “economically significant” (e.g., costing the 

economy more than $100 million per year), agencies did not support them with a formal 

regulatory impact analysis described in Executive Order 12866. OIRA reviewed these 58 rules 

carefully but will be open in future years to public nominations of one or more of these rules for 

review. 

B. An Open Approach to Centralized Regulatory Oversight

The Bush Administration supports strong, centralized oversight by OMB’s Office of 

Information and Regulatory Affairs (OIRA) to stimulate development of a smarter regulatory 

process. To best achieve this goal, OIRA has developed a more transparent and open approach 

to centralized regulatory oversight based on professional analysis. Although some critics 

perceive OIRA as a mysterious organization, the long-term, cumulative impact of the steps 

described below should help demystify the process of regulatory oversight. 

4

Numbers in parenthesis identify the commenters. Appendix B contains the key to their identity. Identical 

commenters (about 1,500) are not listed separately. 
12

 

OMB has taken the following specific steps to enhance the openness of the regulatory 

review process: 

• OIRA is improving implementation of the public-disclosure provisions in E.O. 12866, 

including both the letter and spirit of the provisions relating to communications with 

outside parties interested in regulations under review by OIRA. The Administrator’s 

relevant guidance to OIRA staff is available on OIRA’s website: 

<http://www.whitehouse.gov/omb/inforeg/oira_disclosure_memo-b.html>. 

• For meetings subject to the disclosure provisions of E.O. 12866, OIRA maintains a log 

(which notes the meeting date, topic, lead agency, and participants) on OIRA’s website 

and in the public docket room. We also invite the relevant agency to the meetings with 

outside parties, and we file any documents submitted at E.O. 12866 meetings in our 

docket room, with copies provided to the agency. Substantive phone calls on rules under 

review are logged and disclosed as described under E.O. 12866. 

• Under the E.O. 12866 disclosure procedures, we are posting on the OIRA website 

information about correspondence from outside parties on regulations under review by 

OIRA. Information on this correspondence—including the date of the letter, the sender 

and his or her organizational affiliation, and the subject matter—is available on the OIRA 

website. Copies of these letters are also available in the docket room.5

• OIRA has increased the amount of information available on the OIRA website. In 

addition to the information on meetings and correspondence noted above, OIRA makes 

available communications from the OIRA Administrator to agencies, including “prompt 

letters,” “return letters,” and “post clearance” letters, as well as the Administrator’s 

memorandum to the President's Management Council (September 20, 2001) on 

“Presidential Review of Agency Rulemaking by OIRA.” 

• OIRA has adopted an open-door approach to meetings with outside parties, leading to 

meetings with more than 100 outside groups during 2001 on matters of general regulatory 

policy or specific rules. 

• OIRA has initiated a multi-year process to place OIRA at the forefront of the 

Administration’s E-government initiative. When fully implemented, OIRA’s electronic 

system will permit outside parties ready access to the information now contained only in 

OIRA’s public docket room, while giving the public greater opportunity to provide and 

view the electronic input of others on OIRA decision-making. Openness does not 

necessarily reduce controversy. Indeed, explicitness about the grounds for regulatory 

decision making will in some cases sharpen public controversy by making differences of 

opinion more apparent. Thus, OIRA does not regard absence of public controversy as a 

measure of success of regulatory oversight. Indeed, OIRA hopes a full debate of the 

5

Please call (202) 395-6880 for access to the docket room located in Room 10102, the New Executive Office 

Building, 725 17th St., NW, Washington D.C. 20503. 
13

relative merits of regulation will strengthen regulatory oversight. 

Response to Public Comments 

A large number of commenters supported OIRA’s more open approach to regulatory 

oversight, and no commenters opposed the more open approach. A variety of suggestions were 

made to clarify, refine or expand OIRA’s policy of openness. One commenter (70) suggested 

that OIRA take steps to respond directly to each comment on this Report submitted by the 

public. Although it is not feasible for OIRA to respond to each point made in the roughly 2,000 

comments that have been received, this report does respond to each major category of comments 

that have not caused a revision. 

A number of commenters (70, 77, 79, 80, 93, and 104) urged OIRA to be more explicit in 

this Report about the criteria it uses to rate regulatory reforms as high, medium, or low priority. 

OIRA has decided, however, to use an agency-initiated process for identifying regulatory reform 

candidates, so we are not rating nominations as we did last year. As described in Chapter 4, 

OIRA has developed criteria to help guide agency consideration of potential reforms. 

One commenter (77) expressed concern that OIRA’s policy of early analytic involvement 

with agencies, which is typically done informally, needs to be subjected to a greater degree of 

openness. OIRA believes that its interactions with agencies prior to formal regulatory review are 

pre-decisional communications that should generally be insulated from public disclosure in order 

to facilitate valuable deliberative exchanges. 

One commenter (77) urged more transparency about what it means when OIRA clears a 

rule that is coded by OIRA as Aconsistent with change@. This phrase generally indicates that the 

draft rule OIRA cleared differs in some manner from the original draft submitted to OIRA for 

formal review. OIRA cautions readers that changes from the original draft were not necessarily 

suggested or favored by OIRA. In fact, the cleared rule represents the decision of the rulemaking 

agency. 

 One commenter (93) expressed concern that OIRA does not publicly disclose meetings 

with outside parties that occur at times when a matter is not under formal or informal OIRA 

review. OIRA’s non-disclosure practice in this regard is consistent with E.O. 12866. The same 

commenter expressed concern that, in the meetings with outside parties that OIRA discloses on 

OMB’s website, some of the attorneys present are listed with respect to their law firm affiliation 

rather than the client they represent. OIRA believes that this point has merit. Thus, OIRA staff 

have been instructed to request that attorneys participating in future E.O. meetings indicate, 

where applicable, the client they are representing. 

 One commenter (73), while supporting OIRA’s new policy of openness, cautioned that a 

policy of openness can be taken too far, thereby inducing and exacerbating public disagreements 

between officials within the executive branch. OIRA agrees that a balance needs to be struck in 

order to foster valuable deliberative communications among executive branch agencies. 
14

C. Gatekeeper for New Rulemakings

Presidential Executive Order 12866 provides OIRA with substantial authority to review 

rulemaking proposals from agencies. An average of 600 significant rulemaking actions were 

approved per year from 1993 to 2000. During the period of 1997 to 2000, OIRA did not return 

any rules to agencies for reconsideration. The absence of returns could indicate either that the 

agency-OIRA relationship was tilted too heavily in favor of the agencies or that the agencies 

were meeting OIRA’s expectations. Although it is often better for OIRA to work with an agency 

to resolve a problem rather than simply return a rule, the degree of OIRA’s actual effectiveness 

can be questioned when it declines to use its authority to return rules. 

Recently, OIRA has revived the Areturn letter,@ making clear that OMB is serious about 

the quality of new rulemakings. From July 1, 2001 to October 15, 2002, there were 22 

significant rulemakings returned to agencies for reconsideration. As the data in Table 2 

illustrate, this represents a significant rate of return when measured against OIRA’s 20-year 

history. 

Table 2. Executive Order Reviews and Returns

1981 – 2001

Year Total Reviews Returns Percent 

2001 700 18 2.6%

2000 579 0 0.0%

1999 583 0 0.0%

1998 486 0 0.0%

1997 507 4 0.8%

1996 503 0 0.0%

1995 619 3 0.5%

1994 861 0 0.0%

1993 2,167 9 0.4%

1992 2,286 9 0.4%

1991 2,525 28 1.1%

1990 2,138 21 1.0%

1989 2,220 29 1.3%

1988 2,362 29 1.2%

1987 2,315 10 0.4%

1986 2,011 29 1.4%

1985 2,213 34 1.5%

1984 2,113 58 2.7%

1983 2,484 32 1.3%

1982 2,641 56 2.1%

1981 2,798 45 1.6%

Total 35,111 414 1.2%
The technical and policy rationales for OIRA’s returns are stated in letters to agency 

officials that are made public and posted on OIRA’s website. In ten cases, after modifications 

and later submission for review under E.O. 12866, OIRA approved the rule. Table 3 provides 

the status of the rules that OIRA has returned to agencies. 

Table 3. Status of Draft Rules Returned for Reconsideration as of 10/8/02

Agency Rule Returned Resubmitted OMB Review

Ended

USDA Environment Enhancement for 

Nonhuman Primates 

1/29/02 Not Resubmitted – 

HUD Public Housing Capital Fund Program 11/21/01 Not Resubmitted – 

HUD Establishment of a Demonstration RiskSharing Program 9/26/01 Not Resubmitted – 

DOT Tire Pressure Monitoring Systems 2/12/02 5/28/02 5/29/02 

DOT U.S. Locational Requirement for 

Dispatching the U.S. Rail Operations

9/20/01 11/13/01 11/20/01

DOT Digital Flight Data Recorder Regulations 9/14/01 Not Resubmitted – 

DOT Corrosion Prevention and Control 

Program

9/14/01 6/18/02 9/16/02

DOT Aging Aircraft Safety 9/14/01 6/18/02 9/24/02 

DOT Certification of Pilots, Aircraft, and

Repairmen for Light Sport Aircraft 

8/8/01 12/17/01 1/3/02

DOT Safety Requirements for External Product 

Piping on Cargo Tanks Transporting 

Flammable Liquid 

8/8/01 Not Resubmitted – 

DOT Part 145 Review: Repair Stations 7/20/01 7/20/01 7/30/01 

VA Evidence of Permanent and Total 

Disability 

9/14/01 Not Resubmitted – 

VA Medical Care and Treatment for which 

VA Will Not Seek Reimbursement

10/3/01 Not Resubmitted – 

VA Exclusions from Income 11/28/01 Not Resubmitted – 

VA Availability of Vendee Financing for VAAcquired Properties 10/8/02 Not Resubmitted – 

EPA Water Quality Standards for Indian

County 

10/2/01 Not Resubmitted – 

15
Table 3. Status of Draft Rules Returned for Reconsideration as of 10/8/02

Agency Rule Returned Resubmitted OMB Review

Ended

SBA Small Business Size Standards: Economic

Injury Disaster Loan Payment 

2/11/02 5/15/02 5/23/02

SSA Clarification of Rules 9/27/01 4/3/02 5/28/02

SSA Filing Claims under the Federal Tort

Claims Act and the Military Personnel 

and Civilian Employees Claims Act 

9/27/01 Not Resubmitted – 

SSA Revised Medical Criteria for Evaluating 

Hematologic Disorders and Malignant

Neoplastic Diseases 

9/27/01 11/9/01 11/14/01

SSA Representative Payment Under the Title II 

and Title XVI of the Social Security Act 

9/27/01 Not Resubmitted – 

SSA Ticket to Work and Self-Sufficiency 

Program

11/15/01 11/20/01 12/17/01

The quality of regulatory packages seems to be improving, as reflected in the recent 

decline in the number of returns (i.e., only one return since February 2002). More importantly, 

there is earlier interaction between OIRA and agency staffs during regulatory development in 

order to prevent returns late in the rulemaking process. It is at these early stages where OIRA’s 

analytic approach can most improve the quality of regulatory analyses and the substance of rules. 

For example, OIRA and EPA recently announced an initiative to fashion jointly a major rule to 

reduce pollution from off-road diesel engines used in mining, agriculture, construction and 

airport service. 

In a September 20, 2001, memorandum to the President’s Management Council, the 

OIRA Administrator summarized for top agency officials the supporting information that must 

accompany a draft significant regulatory action. The seven specific elements are described 

below. 

• First, the agency should articulate how the draft regulatory action is consistent with the 

principles and procedures of E.O. 12866 and the underlying statute(s). An important aspect of 

OIRA’s review of a draft rule is an evaluation of the possible impact on the programs of other 

Federal agencies. OIRA will make an assessment, in collaboration with policy officials from

interested agencies, as to whether the draft action is consistent with the policies and priorities of 

the Administration. 

• Second, the agency must prepare a formal regulatory impact analysis (RIA) for 

rulemaking actions deemed economically significant. This analysis should include an 

assessment of benefits and costs (quantitative and qualitative) and a rigorous analysis of 

potentially effective and reasonably feasible alternatives. The RIAs should be timely and 

16
17

 

prepared in a way consistent with OMB’s government-wide guidance, as explained by 

OMB on March 22, 2000 and June 19, 2001.6

 An RIA is necessary regardless of whether 

the underlying statute governing agency action requires, authorizes or prohibits costbenefit analysis as an input to decisionmaking. The public and Congress have an interest 

in benefit and cost information, regardless of whether it plays a central role in 

decisionmaking under the agency’s statute. Congress has mandated that OMB provide 

such information in this annual report to Congress on the costs and benefits of regulation. 

• Third, for draft regulatory actions that are supported by influential risk assessments of 

health, safety and environmental hazards, OIRA recommends that agencies adopt or 

adapt the basic informational quality and dissemination standards that Congress adopted 

in the Safe Drinking Water Act Amendments of 1996.7 These standards were recently 

included in OMB’s government-wide guidelines on information quality.8

• Fourth, for regulatory actions with impacts on State, local, and tribal governments, OIRA 

staff will insist on agency certification of compliance with Executive Orders 13132 and 

13175,9

 and compliance with the Unfunded Mandates Reform Act. The OMB Director 

has pledged to Congress that OIRA will return any rulemaking proposal to agencies that 

has not been subjected to adequate consultation with affected State, local, and tribal 

officials. 

• Fifth, under the Regulatory Flexibility Act, as amended by the Small Business Regulatory 

Enforcement Fairness Act of 1996 (SBREFA),10 OIRA ensures that impacts on small 

businesses and other small entities are taken into account in the regulatory process. This 

work is done in part in collaboration with the Small Business Administration’s Chief 

Counsel for Advocacy. OIRA looks for an appropriate analysis of small business 

impacts, including an evaluation of regulatory alternatives designed to reduce the burden 

on small businesses without compromising the statutory objective. In the cases of OSHA 

and EPA rulemakings under SBREFA that are expected to have significant economic 

impacts on a substantial number of small entities, OIRA staff participate in Small 

Business Advocacy Panels prior to publication of a rulemaking proposal. In a recent 

Memorandum of Understanding between OIRA and SBA Advocacy Office, OIRA 

pledged to return for reconsideration any rulemaking package that had not adequately 

considered impacts on small businesses and other small entities.11 In addition, on August 

13, 2002, President Bush issued E.O. 13272, which requires agencies to notify the Chief 

Council for Advocacy of any draft rules that might have a significant economic impact on 

a substantial number of small entities when they submit them to OIRA for E.O. 12866 

6

OMB Memorandum M-01-23, Improving Regulatory Impact Analyses, June 19, 2001. 

7

42 U.S.C. 300g-1(b)(3)(A) & (B) 

8

OMB, “Guidelines for Ensuring and Maximizing the Quality, Objectivity, Utility, and Integrity of Information 

Disseminated by Federal Agencies,” (67 FR 8452, February 22, 2002). 

9

E.O., 13132, Federalism, August 4, 1999 (64 FR 43255, August 10, 1999); E.O. 13175, Consultation and 

Coordination with Indian Tribal Governments, November 6, 2000 (65 FR 67249, November 9, 2000), 

105 U.S.C. Chapter 6 

11See http://www.whitehouse.gov/omb/inforeg/oira.pdf
18

review, authorized Advocacy to comment to the agency and OIRA on the draft rule, and 

directed agencies to give every appropriate consideration to the comments.12

• Sixth, under E.O. 13045, OIRA reviews proposed regulatory actions that may pose 

disproportionate environmental or safety risks to children.13 E.O. 13045 requires 

agencies to prepare an evaluation of the risks to children of planned regulations, 

including an explanation of why the planned regulation is preferable to other potentially 

effective and reasonably feasible alternatives considered by the agency. 

• Finally, OIRA administers the provisions of Executive Order 13211, especially the 

required AStatements of Energy Effects,@ in situations where a rule may have significant 

impacts on energy supply, distribution or use.14 OIRA published guidance for 

implementing the new energy executive order on July 13, 2001.15 

Despite the apparent complexity of these analytical and procedural requirements, OIRA 

is committed to performing its regulatory reviews within the 90-day period set out in E.O. 12866. 

As Table 4 reveals, OIRA has already made substantial progress in reducing the number of 

reviews that consume more than the allotted 90 days. 

Table 4. E.O. 12866 Reviews Over 90 Days by Date

Month Year Pending Over 90 Days Total Pending % Over 90 Days

January 1999 15 77 19.5% 

April 1999 10 84 11.9% 

July 1999 11 84 13.1% 

October 1999 16 76 21.1% 

January 2000 15 83 18.1% 

April 2000 19 124 15.3% 

July 2000 24 101 23.8% 

October 2000 42 154 27.3% 

January 2001 50 117 42.7% 

April 2001 4 72 5.6% 

July 2001 25 97 25.8% 

October 2001 1 62 1.6% 

January 2002 0 83 0.0% 

 

12See http://www.sba.gov/advo/laws/eo13272.pdf 

13See E.O. 13045, Protection of Children From Environmental Health Risks and Safety Risks, April 21, 1997. 14Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use, May 18, 2001 (66 

FR 28355, May 22, 2001). 

15OMB Memorandum M-01-27, Guidance for Implementing E.O. 13211, July 13, 2001.
Table 4. E.O. 12866 Reviews Over 90 Days by Date

Month Year Pending Over 90 Days Total Pending % Over 90 Days

April 2002 0 72 0.0%

July 2002 1 73 1.4%

October 2002 0 105 0%

OIRA regards the 90-day review limit as a performance indicator for a strong regulatory 

gatekeeper. In previous Administrations, some OIRA reviews consumed more than six months or 

even more than a year without any conclusion for the agency. OIRA intends to provide agencies 

with prompt and explicit responses to their draft rulemaking actions. 

Response to Public Comments 

Public commenters were divided as to whether OIRA’s revitalized role as regulatory 

gatekeeper is a good or bad development. Supporters of OIRA’s revitalized role welcomed the 

enhanced analytic discipline in the rulemaking process, particularly the renewed emphasis given 

to cost-benefit considerations (12, 24, 30, 32, 37, 73, 78, 79, and 85). One commenter (79) 

welcomed the effect that returns have had on increasing the willingness of agencies to consult 

with OIRA about rules under development. OIRA believes the increasing willingness of 

agencies to collaborate with OIRA may partly explain the absence of return letters from OIRA 

during the March-October 2002 period. Yet one commentator (106) cautioned that early OIRAagency collaboration in rule development should not cause OIRA to relax its Aarms-length@

relationship with regulators. Several commenters (79, 85, and 104) urged OIRA to provide 

more information about what happens to returned rules, including agency responses and final 

outcomes. OIRA believes this comment has merit and is considering how to best respond to this 

request, beyond the information provided in this report (see Table 3). Other critics argued that 

OIRA’s approach was confrontational with respect to agencies (70, 93), that OIRA was giving 

too much emphasis to cost-benefit considerations in reviewing agency submissions (70, 77, 80, 

94), that returns rarely promote health and safety (77), and that OIRA may be exceeding its legal 

authority when it returns rules (70, 93). 

E.O. 12866 provides careful and explicit authority for the return of rules to agencies for 

reconsideration and OIRA has been explicit about the general criteria for returns. 16 Each return 

has a written technical and/or policy rationale that is disclosed to the public. With various 

degrees of frequency, this authority to return rules has been used by OIRA and respected by 

agencies for more than 20 years. Of course, OIRA respects all laws relevant to a particular 

rulemaking. No commenter has provided any clear example where OIRA’s decision to return a 

rule for reconsideration had violated any statute. 

 

19

16Memorandum for the President’s Management Council from John D. Graham, “Presidential Review of Agency

Rulemaking by OIRA,” September 20, 2001.
20

D. Greater Use of Formal, Independent, External Peer Review 

In a September 20, 2001 memorandum to the President’s Management Council, OIRA 

recommended that draft RIAs, including supporting technical documents (e.g., risk assessments 

and engineering feasibility studies) be subjected to formal, independent, external peer review. 

Given the growing public interest in peer review practices, OIRA recommended a four-point 

plan of competent and credible peer review: (a) peer reviewers should be selected primarily on 

the basis of necessary technical expertise; (b) peer reviewers should be expected to disclose to 

the agency any prior technical/policy positions they have taken on the issues at hand; (c) peer 

reviewers should be expected to disclose to the agency their sources of personal and institutional 

funding (public sector and private sector sources); and (d) peer reviews should be conducted in 

an open and rigorous manner. 

OIRA did not require greater use of peer review. Instead, OIRA has offered each agency 

an extra measure of deference during OMB review if a regulatory package has been subjected to 

competent and credible peer review. EPA’s recent decision to affirm an arsenic standard in 

drinking water of 10 parts per billion was supported by substantial peer review, including reports 

from the National Research Council of the National Academy of Sciences and the Agency’s 

Science Advisory Board. Although this is a relatively intensive amount of peer review, OIRA 

expects that agencies will tailor the intensity of peer review—which can be costly and timeconsuming—to the importance of the issue. 

Response to Public Comments 

There were numerous public comments on OIRA’s encouragement of agencies to make 

greater use of formal, independent external peer review. One commenter (79) noted that many 

peer review efforts sponsored by agencies do not satisfy OIRA’s four-point program of 

competent and credible peer review. Another commenter (37) is concerned that peer review is 

only valuable if agencies use the technical suggestions of peer reviewers (37). In the eyes of one 

commenter (106), peer review of agency science is a more promising strategy than judicial 

review of agency science (except for procedural matters). OIRA generally shares these views. 

Several commenters (77, 93) argued that OIRA’s vision of peer review does not go far 

enough in preventing or minimizing conflicts of interest due to commercial interests (77, 93). 

They argued that disclosure of potential conflicts to the agency is not sufficient; they sought 

disclosure of financial information and other potential conflicts to the public. If scientists have 

conflicts, some argue, they should be replaced by scientists who have no conflicts, assuming 

such expertise exists. OIRA expects that the most knowledgeable and well-respected scientists 

will be in the highest demand from the private and public sectors and thus are likely to have the 

most potential conflicts. Moreover, OIRA is concerned that some public-disclosure suggestions 

(e.g., those involving public disclosure of sources and amounts of personal income to scientists) 

might be perceived as an invasion of privacy and thereby reduce the rate of scientific 

participation in agency work. This area certainly deserves further consideration, and OIRA is 

aware that both FDA and EPA are refining their approach to selection of scientists for service on 

peer review panels. OIRA is also tracking the conflict-of-interest practices of leading scientific 
21

journals and the National Research Council of the National Academy of Sciences. OIRA shares 

the view that more care needs to be given to addressing conflict-of-interest concerns. 

Several commenters (99, 100, and 104) raised cost-benefit concerns about greater agency 

use of formal, independent external peer review. OIRA shares these concerns and has therefore 

suggested that agencies tailor the intensity of peer review to the importance of the issue. EPA 

has already prepared a document on different types of peer review and has considerable 

experience to offer in this area (99). Reviews conducted by electronic communication, for 

example, may be more cost-effective than multi-day meetings in Washington, DC. OIRA is also 

exploring whether it would be adequate, at least in some cases, to have RIAs peer-reviewed by 

specialists within the Federal government who do not work for the agency that has produced the 

RIA under review. 

E. Proactive Role in Establishing Regulatory Priorities 

Historically, OIRA has been a reactive force in the regulatory process, responding to 

proposed and final rulemakings generated by Federal agencies. Under the Bush Administration, 

OIRA is taking a proactive role in suggesting regulatory priorities for agency consideration. In 

order to play this role constructively, we have devised the Aprompt letter” to bring a policy matter 

to the attention of agencies. 

OIRA’s initial six prompt letters have addressed a range of issues at five different 

agencies: 

• a letter to FDA requested that a consumer labeling rule involving the trans fatty acid 

content of foods be finalized in order to reduce an established risk factor for coronary 

artery disease; 

• a letter to OSHA urged that actions be taken to promote the availability and proper use of 

automated external defibrillators, a technology that can save lives among people suffering 

from sudden cardiac arrest; 

• a letter to NHTSA urged initiation of a new rulemaking that would require vehicle 

manufacturers to test cars and light trucks for occupant protection in what are called 

Aoffset@ frontal collisions, a crash mode responsible for a significant number of lower 

extremity injuries to occupants; 

• a letter to EPA urged administrative and legislative action to reduce public exposure to 

fine particles in outdoor air emissions, coupled with a targeted, multi-year research 

program aimed at discovering which sources of particles are most responsible for the 

adverse health impacts of breathing fine particulate matter; 

• a letter to EPA encouraged steps to improve the utility of the data available on the 

environmental performance of industrial facilities. Better environmental information 

plays an essential role in advancing our objectives of protecting public health and the 
22

environment. The letter suggested that EPA explore several steps to enhance the practical 

utility of the information available to the public by establishing a single facility 

identification number, setting up an integrated system for reporting and access of data 

across multiple programs, and improving the timeliness of the availability of Toxic 

Release Inventory data; and 

• a letter to request that the Office of Federal Housing Enterprise Oversight (OFHEO) 

consider a rulemaking to strengthen the corporate governance of Fannie Mae and Freddie 

Mac and require the two publicly traded firms to make certain public disclosures. These 

steps would advance the President’s Ten Point Plan for Corporate Responsibility and 

Protecting America’s Shareholders by providing better information to investors and 

making corporate officers more accountable. Currently, the two firms are exempt from 

direct SEC oversight but are within the purview of OFHEO’s regulatory mission to 

extend generally applicable principles of governance and disclosure to them. 

Prompt letters do not have the mandatory implication of a Presidential directive. Unlike a 

“return letter,” which is authorized by E.O. 12866, the prompt letter simply constitutes an OIRA 

request that an agency elevate a matter in priority, recognizing that agencies have limited 

resources and many conflicting demands for priority attention. The ultimate decision about 

priority-setting remains in the hands of the regulatory agency. 

An important feature of the prompt letter can be its public nature, aimed at stimulating 

agency, public and congressional interest in a potential regulatory or informational priority. 

Although prompt letters could be treated as confidential pre-decisional communications, OIRA 

believes that it was wiser to make these prompt letters publicly available in order to focus 

congressional and public scrutiny on the important underlying issues. 

Suggestions for possible prompt letters can be submitted in the public comment process 

leading to the publication of this annual report or faxed to the OIRA Administrator at (202) 395-

3047 (note OIRA is still not receiving first-class mail). Agencies are still responding to the first 

six prompt letters, but the original letters and initial agency responses are posted on OIRA’s 

website. Table 5 provides a brief summary of agency responses to the original six prompt letters 

and related OMB and agency follow-up activities. 

Table 5. AGENCY RESPONSES TO PROMPT LETTERS

Agency Prompt Letter Subject Agency Response

OSHA Promoting use of automated external defibrillators. OSHA has issued a technical information 

bulletin and is contemplating further 

action. 

FDA Labeling for trans-fatty acids. FDA has committed to publishing a final 

rule by the conclusion of calendar year 

2002. 
Table 5. AGENCY RESPONSES TO PROMPT LETTERS

Agency Prompt Letter Subject Agency Response

EPA Researching fine particulate matter. OIRA will soon be meeting with EPA on

this topic. No rulemaking is required. 

NHTSA Modifying its frontal occupant protection standard

by establishing a high-speed, frontal offset crash

test. 

NHTSA plans to issue an NPRM by June

2003. 

EPA Improving the utility of the data available on the 

environmental performance of industrial facilities. 

EPA is actively working on projects in 

this area. No rulemaking is required. 

OFHEO Strengthening the corporate governance of Fannie 

Mae and Freddie Mac 

OFHEO is currently working on an 

NPRM. 

Response to Public Comments 

With some exceptions (69, 77, 93, 105), commenters were generally supportive of 

OIRA’s innovative use of prompt letters to suggest promising regulatory and information-policy 

priorities to agencies. The public nature of prompt letters was particularly appreciated. 

Commenters submitted a variety of possible ideas for prompt letters, and we have merged these 

suggestions with the public nominations for regulatory reform 

Another commenter (77) expressed concern about whether OIRA, by issuing prompt 

letters to agencies, may be usurping the priority-setting role of agencies. Yet OIRA defines 

prompt letters as a request for agency consideration, not a directive or dictate. Agencies are 

entitled to protect their priority-setting discretion by declining a request made in the form of a 

prompt letter from OIRA. The record shows that agencies have been careful about considering 

OIRA’s prompt letters and making independent decisions as to whether OIRA’s ideas are worth 

pursuing. The same commenter (77) acknowledged that an OIRA prompt letter may be 

appropriate as a device to accelerate a worthy rulemaking that an agency has already initiated but 

not completed. 

Another commenter (105) suggested some possible disadvantages to the use of OMB 

prompt letters. The prompt might undercut (rather than assist) an agency’s efforts to bring 

closure to a contentious issue. Moreover, a formal prompt letter may be less effective than an 

informal suggestion to agency officials, though such informality is less transparent. 

OIRA agrees with the following cautionary remarks about prompt letters made by 

commenters. First, prompt letters should be used judiciously (32). Second, prompt letters 

should not be used if they become an invitation for agencies to propose regulations without 

rigorous analysis (79). Finally, there is need for a more systematic, governmentwide approach to 

helping agencies set wise rulemaking priorities (106). 

23
24

 

F. Overseer of the Quality of Information and Analysis

In addition to clearing, modifying, or returning specific rulemaking proposals by 

agencies, OIRA also plays an important role in promoting the quality of the information used and 

disseminated by agencies. This includes the information posted on agency websites, issued in 

routine, yet important statistical reports, and used in regulatory impact analyses. 

In the Bush Administration, OIRA has taken a strong interest in improving the quality of 

information and analysis used and disseminated by agencies. This initiative complements a 

variety of the initiatives in the President’s Management Agenda. 

The Paperwork Reduction Act of 1980, as amended in 1995,17 provides OMB broad 

authority in the field of information policy. OMB Circular A-130, AManagement of Federal 

Information Resources,@ provides structure and content to the executive branch’s commitment to 

information dissemination. 

During the Clinton Administration, some argued that scientific information produced 

with Federal financial support and used to support binding agency actions was not always 

available for public scrutiny and reanalysis. With new authority from Congress, OMB played an 

important role, through OMB Circular A-110, in clarifying the degree of public access to such 

information required through the Freedom of Information Act. 

Information Quality Guidelines 

In Section 515 of the Treasury and General Government Appropriations Act for Fiscal 

Year 2001 (Public Law 106-554; H.R. 5658), Congress further directed OMB to issue 

government-wide guidelines to ensure and maximize the quality of information disseminated by 

Federal agencies. After two rounds of public and interagency comment, OMB issued these 

guidelines in interim final form on September 28, 2001 and in final form on February 22, 2002.18 

Each Federal agency subject to the Paperwork Reduction Act, including the independent 

agencies, must now issue tailored information-quality guidelines that are compatible with 

OMB’s general guidelines. Section 515 reflects a concern by Congress that some programs and 

agencies are distributing information to the public that is of questionable quality, objectivity, 

usefulness and security. 

The OMB guidelines direct all Federal agencies to provide affected parties concerned 

about poor quality information with the opportunity to seek administrative corrections to agency 

information, with assurances that their complaints will be addressed in a timely manner. 

Although some agencies already have well-developed information quality management 

procedures, OMB believes that agency practices are uneven and that insufficient thought has 

been devoted to assuring the objectivity of agency responses to complaints from the public. 

1744 U.S.C., chapter 35. 

18A January 3, 2002, final version was reissued in corrected form on February 22, 2002 (67 FR 8452). It is also 

available on our web site at <http://www.whitehouse.gov/omb/>. 
25

 

Improving information quality can be costly. Therefore, it is important that the costs and 

benefits of better information to the public be considered. In this regard, the OMB guidelines 

draw an important distinction between Ainfluential@ and ordinary information. AInfluential@ is 

defined in the context of Ascientific, financial and statistical information,@ as information that the 

agency Acan reasonably determine . . . will have or does have a clear and substantial impact on 

important public policies or important private sector decisions.@ OMB’s government-wide 

guidelines subject influential information to higher quality standards than ordinary information. 

With several important exceptions and qualifications, the OMB guidelines require that 

influential information disseminated by agencies be reproducible by qualified third parties. If 

influential information is to be disseminated without the capability of reproduction, it is subject 

to some special robustness and transparency requirements. The OMB guidelines provide 

agencies a measure of flexibility in the interpretation and implementation of these standards. 

In order to facilitate better public and scientific input into the process of informationquality improvement, OMB encouraged agencies to commission the National Research Council 

of the National Academy of Sciences (NAS) to undertake several workshops aimed at assisting 

agencies in the development of their information quality guidelines. These workshops took place 

in the spring of 2002 and were each attended by several hundred participants.19 OMB also 

organized several interagency committees to address information quality issues that are likely to 

be shared by two or more Federal agencies. In a June 10, 2002, memorandum to the President’s 

Management Council (PMC), OMB also suggested various improvements to draft agency 

guidelines. OMB reviewed the final information guidelines prepared by agencies prior to the 

effective date of October 1, 2002. As part of this review, OMB sent a memorandum to the PMC 

on September 5, 2002, that identified a few process issues for which cross-agency uniformity 

would help improve agency implementation of their guidelines. 

OMB’s new information quality guidelines establish stricter standards for agency 

analyses of original data than for the data themselves. OMB believes that agencies are in a better 

position than OMB to establish specific quality standards for the generation of original and 

supporting data. 

Guidelines for Regulatory Impact Analyses 

With regard to the quality of regulatory impact analyses prepared by agencies, OIRA has 

initiated a process of refinement to its formal analytic guidance documents.20 This activity, to be 

co-chaired by the OIRA Administrator and a member of the Council of Economic Advisors 

(CEA), will be supported by public comment, agency comments, and external peer review. In 

19The workshops took place on March 21-22, 2002, and on May 30, 2002. The workshop transcripts are available 

on the NAS website at < http://www7.nationalacademies.org/stl/Data_Dissemination_Meeting.html> and at 

<http://www7.nationalacademies.org/stl/DQ_Workshop.html>.

20See Economic Analysis of Federal Regulations Under Executive Order 12866 (“Best Practices Guidance”) 

(January 11, 1996). 
26

 

this draft report, OMB sought comment on the particular analytic issues that should be addressed 

in the refinement of OMB’s analytic guidelines. At a minimum, OMB-CEA will address the 

following issues: 

• the practice of applying a 7 percent real discount rate to future costs and benefits in both 

intragenerational and intergenerational applications; 

• the methods employed to account for latency periods between exposure to toxic agents 

and development of chronic diseases; the methods employed to value in monetary units 

reductions in the risk of premature death, illness and health impairment as well as costeffectiveness methods that forgo monetization of health gains and instead express health 

benefits through metrics such as the number of quality-adjusted-life years (QALY) saved 

or the number of disability-adjusted life years (DALYs) saved;21

• the need for use of methods of risk assessment that supply central estimates of risk as 

well as upper and lower bounds on the true yet unknown risks; 

• the need for methods of risk assessment to account for the vulnerabilities of specific 

subpopulations such as the children, the elderly, and the infirm; and 

• methods for valuing improvements in the health of children. 

We urged public commenters and agencies to nominate additional analytic issues for 

OIRA-CEA consideration. The ultimate guidance that emerges from this process will be used by 

OIRA when evaluating the regulatory proposals and analyses submitted by agencies. 

Response to Public Comments 

OIRA’s growing role as promoter of information and analysis quality stimulated a wide 

range of comments that are difficult to summarize. The major themes are discussed below as 

they relate to information and analysis quality. 

Information Quality 

One commenter (77) expressed concern that OIRA has interpreted the informationquality statute too broadly. The commenter believes that the statute addresses only factual 

errors, not a general concern for the quality of data or data interpretation. OIRA has a different 

view. The key terms objectivity, utility and integrity—key dimensions of quality—convey an 

interest in information quality that goes beyond prevention and correction of factual errors. The 

statute emphasizes the quality of information, and does so in the context of the Paperwork 

21The quality-adjusted-life-year or QALY approach weights life-years extended based on criteria established by 

medical experts, patients, and community residents to allow comparisons of different health outcomes. See M.R. 

Gold, J.E. Siegel, L.B. Russell, and M.C. Weinstein, (eds.) Cost-Effectiveness in Health and Medicine. New York, 

NY, Oxford University Press, 1996. 
27

 

Reduction Act,22 with its emphasis on ensuring the greatest possible benefit from and 

maximizing the utility of information created, collected, maintained, and disseminated by 

Federal agencies. 

Another commenter (93) questioned OIRA’s view that the information-quality law covers 

independent agencies. However, as the law directed OMB to issue its guidelines under authority 

provided by the Paperwork Reduction Act, OMB interpreted the information quality law to apply 

to those covered by the Paperwork Reduction Act. 

Another commenter (37) supported OIRA’s policy of expanding use of the risk 

assessment principles found in the Safe Drinking Water Act Amendments of 1996. However, 

the same commenter noted that EPA, while moving in the right direction, has been somewhat 

slow to implement these principles. One commenter (77) expressed concern about taking 

information quality principles about risk assessment, those found in the Safe Drinking Water Act 

Amendments, and applying them throughout the entire risk assessment process of the Federal 

government. OIRA believes that the OMB guidelines provide agencies with the flexibility to 

adapt rather than adopt the Safe Drinking Water Act principles, if adaptation is appropriate for a 

particular agency context. 

Two commenters (12, 79) recommended that OIRA use the new information-quality 

guidelines as a basis for disapproval of agency information-collection requests under the 

Paperwork Reduction Act. OIRA believes that this suggestion has merit and will incorporate the 

guidelines’ principles into our PRA reviews. 

One commenter (106) expressed concern that information-quality challenges may spawn 

a new wave of litigation, thereby exacerbating the highly legalistic tendencies of the U.S. 

regulatory system. Another commenter (104) expressed concern that OIRA has not given 

adequate cost-benefit consideration to the net value of stricter information-quality requirements. 

OIRA believes that OMB’s information quality guidelines do reflect cost-benefit considerations 

and are not likely to give rise to a new wave of litigation. 

Several commenters (12, 77, 79, 80) stressed that OIRA should make sure that this Final 

Report to Congress satisfies OMB’s new information-quality guidelines. OIRA has complied 

with the OMB guidelines in issuing this report. 

Analysis Quality 

There was substantial support for—and no general opposition to—the OMB-CEA 

initiative to refine OIRA’s guidance document on regulatory analysis. However, two 

commenters (73, 79) expressed the view that enforcement of guidance deserved more priority 

than refinement of the existing OIRA guidance to agencies. OIRA agrees that refinement of 

guidance is not very useful if the guidance is not enforced. 

2244 U.S.C. Chapter 35.
28

 

One commenter (85) expressed the view that Congress should pass a law or the President 

should issue an executive order that requires agencies to comply with OIRA’s analytic guidance 

to agencies. Another commenter (78) recommended that such a law be focused on independent 

agencies while other commentators concurred that OIRA should give more priority to 

independent agencies (83, 52). OIRA believes that a new legal requirement that agencies adhere 

to OIRA’s guidance is worthy of serious consideration. The appropriate roles for peer review 

and OIRA review (as opposed to congressional and judicial review) of such a requirement also 

merit consideration. 

One commenter (71) expressed support for use of both cost-effectiveness analysis (CEA) 

and cost-benefit analysis (CBA) in the evaluation of health and safety as well as medical 

programs. With regard to improving the quality of CEA, the same commenter referred to the 

report of analytic guidelines issued by an expert panel commissioned by the Department of 

Health and Human Services. A summary of the guidelines was published in the Journal of the 

American Medical Association in 1996. OIRA is reviewing that report and the larger book 

(Oxford University Press, 1996) upon which it is based.23 This report recommends a standard set 

of analytic practices, including use of quality-adjusted life years as the standard effectiveness 

metric. 

Several commenters (70, 77, 80, and 93) expressed opposition—on ethical, legal and/or 

technical grounds—to the exercise of placing monetary values on human health, safety and 

environmental consequences of regulations. OIRA observes that these concerns help explain 

why many health economists and decision scientists have supported the development of costeffectiveness analysis as a supplement or alternative to cost-benefit analysis of health and safety 

regulations. 

OIRA shares the views of commenters that full monetization of costs and benefits is not 

always necessary or recommended (104) and that decision makers need to consider carefully 

how much weight to give to unquantified versus quantified considerations (37). One commenter 

(80) made a plausible case that the Roadless Area Conservation rule is an example where the 

considerations that the agency has not yet been able to quantify are more important than the few 

costs and benefits that have been quantified. 

Another commenter (100) cited references to Adevastating@ critiques of CBA as applied to 

health, safety and environmental regulation. OIRA notes that these critiques are authored 

primarily by legal specialists and are not published in the peer-reviewed journals where technical 

experts in CBA and CEA publish. Nevertheless, OIRA believes that some of these criticisms 

are valid and they will be addressed in OIRA’s refined analytic guidance to agencies. 

23See Weinstein MC, Siegel JE, Gold MR, Kamlet MS, and Russell LB. Recommendations of the Panel on CostEffectiveness in Health and Medicine. JAMA 1996;276: 1253-1258 and M.R. Gold, J.E. Siegel, L.B. Russell, and 

M.C. Weinstein, (eds.) Cost-Effectiveness in Health and Medicine. New York, NY, Oxford University Press, 1996. 
29

In order to support cost-effectiveness analysis in the health arena, measures of 

effectiveness such as lives saved, life-years saved, quality-adjusted life years (QALYs) saved 

and disability-adjusted life years (DALYs) saved have been used. The principal advantage of 

QALYs and DALYs over the older measures is that they permit morbidity and lifesaving 

benefits to be combined into a single numerical index. Otherwise, the benefits of health policies 

in terms of reduced nonfatal illness and functional impairment cannot be considered in costeffectiveness analysis. Commenters raised a variety of legal, ethical and technical concerns 

about QALY-like measures (70, 80, 82, and 99). Some commenters (37, 73) recommended use 

of life-years saved while QALYs are further developed, but these commenters did not address 

how analysts should account for reductions in non-fatal conditions and functional impairments. 

OIRA will address these issues in more detail in its forthcoming public comment process on 

OIRA’s refined guidance to agencies on how to conduct regulatory analysis. 

Two commenters (80, 93) expressed particular concerns about the current technical 

inability to place dollar values on ecological values such as wilderness protection and species 

diversity. Another commenter (99) noted that there is a spectrum of qualitative and quantitative 

information on benefits and costs of environmental policies that can inform decision makers. 

OIRA acknowledges that, given the current state of the art of environmental economics, some 

environmental values—important as they are—must be treated qualitatively or only semiquantitatively in regulatory analysis. 

The following issues were recommended for inclusion in OIRA’s refined analytic 

guidance document: 

• the role of stakeholders in supplying data, suggesting alternatives and offering criticisms 

in the development of RIAs (12); 

• the use of formal analytic tools from decision science in RIAs, such as quantitative 

uncertainty analysis and value-of-information analysis (12, 71) and the use of best 

estimates for costs and benefits, not just ranges for uncertain figures (78); 

• the standardization of analytic identification and quantification of costs and benefits (12, 

24); 

• the disclosure of sources of overestimation of the costs of industrial regulation, including 

analytic strategies to reduce overestimation or protocols to compensate for anticipated 

overestimation (72, 77, 80, 99); 

• the role of willingness to pay versus willingness to accept in benefit estimation (77); 

• the role of distributional effects and fairness considerations in RIA (106); 

• more focus on the non-economic costs of regulation, such as adverse effects on human 

health, safety, the environment and intrusions into privacy and freedom (78); 
30

• more focus on generic uncertainties in the application of CBA to environmental 

decisions, including the distinction between CBA as an information tool and CBA as a 

decision criterion for policy making (80, 93); and 

• the analytic treatment of latency periods, the discounting of future health effects, and the 

valuation of effects on future generations (80, 82). 

OIRA and CEA are now considering which of these issues to address in OIRA’s refined 

analytic guidance to agencies. 

G. Expanded and Diversified Professional Staff

In Supreme Court Justice Stephen Breyer’s book Breaking the Vicious Circle, centralized 

regulatory oversight is viewed as a predominantly professional activity rooted in the insights 

gleaned from the analytic tools taught in professional schools throughout the United States. 

OIRA’s history and structure is based on this professional model. The Bush Administration 

supports the development of a strong professional staff at OIRA to support Presidential 

management of the regulatory state. OMB has reviewed the situation and determined that 

additional allocations of staff are necessary at OIRA. 

As Table 6 shows, staffing at OIRA declined steadily from a peak of 90 full time 

equivalents (FTEs) in 1981, when the Office was first created, to a low of 47 FTEs from 1997 to 

2000. The decline occurred continuously for 20 years, through both Republican and Democratic 

Administrations. The decline in OIRA staffing has been steeper than the general decline 

experienced throughout the Office of Management and Budget. Some decline beginning in 1993 

may have been expected by the decision to reduce the number of new Federal rules subject to the 

review requirements of E.O. 12866. Yet the more recent staffing declines occurred at the same 

time that OIRA has assumed new statutory responsibilities from the Congress on issues 

concerning unfunded mandates, paperwork reduction, small business, regulatory accounting, and 

information policy. During the same twenty- year period that OIRA’s staff declined by 48 

percent (1981-2000), the constant dollar budgets at Federal regulatory agencies increased by 71 

percent while staffing increased by ten percent. 24 

 

Table 6. OIRA Staff Ceiling 

Fiscal Year Full Time Equivalents Ceiling 

1981 90 

1982 79 

1983 77 

1984 80 

 

24See Susan Dudley and Melinda Warren, Regulatory Response: An Analysis of the Shifting Priorities of the U.S. 

Budget for Fiscal Years 2002 and 2003 (Regulatory Budget Report No 24, Weidenbaum Center, Washington 

University in St. Louis and Mercatus Center, George Mason University (June 2002) pp. 25 and 26). 
Table 6. OIRA Staff Ceiling 

Fiscal Year Full Time Equivalents Ceiling 

1985 75

1986 75/69*

1987 69

1988 69

1989 62

1990 65

1991 65/60*

1992 60

1993 57

1994 52

1995 50

1996 49

1997 47

1998 47

1999 47

2000 47

2001 49

2002 55

2003 55

 * Indicates a ceiling was reduced in mid-year. 

The Bush Administration has reversed the 20-year decline in OIRA staffing, adding a 

total of eight new professionals for a total of 55 FTEs (FY 2002). Five of these positions will 

provide new science and engineering expertise to OIRA. This will enable us to develop a more 

diversified pool of expertise to ask penetrating technical questions about agency proposals. It 

will also enable us to collaborate more effectively with our colleagues in the Office of Science 

and Technology Policy. The remaining positions will buttress OIRA’s staffing in information 

technology and policy for the E-Government initiative. The new staffing will complement 

OIRA’s historical staffing strengths in economics, policy analysis, statistics and law. 

Response to Public Comments 

One commenter (70) expressed concern that OIRA staff training and experience are 

predominantly in economics. OIRA has always had a multidisciplinary staff and the recent hires 

at OIRA have further increased the diversity in OIRA’s expertise mix. Yet some commenters 

opposed OIRA’s efforts to add more science staff (74, 77, and 93). Two commenters (12, 32) 

expressed the view that OIRA needs more staffing resources, especially given the growing 

31
32

 

statutory obligations that Congress has imposed on OIRA’s declining resource base (73). OMB 

does regularly evaluate OIRA’s staffing needs in relationship to the rest of OMB’s needs. 

H. Facilitator of Agency Reviews of Existing Rules

There are so many Federal regulations now on the books that there has never been an 

accurate, up-to-date count of their exact number. Since many of these rules are quite old, it is 

logical to suggest that existing rules be reviewed to determine whether they remain appropriate. 

Yet regulated entities often adapt creatively to Federal rules in ways that reduce or minimize 

their adverse impact while fulfilling the social objective. The dynamics of post-regulation 

behaviors call into question the validity of efforts to simply add up the costs and benefits of old 

rules based on analyses done prior to the original promulgation of rules. 

Thus, any comprehensive effort to look at existing rules requires original data collection 

and evaluation, a resource-intensive exercise for agencies and regulated entities. Across-theboard reviews of all existing rules have been attempted in the past with limited success and have 

induced a questionable allocation of limited agency and OIRA resources. The Bush 

Administration believes that a selective review process for existing rules, pursuant to public 

comment and new statutory authority provided to OIRA under the Regulatory Right-to-Know 

Act, is the best available mechanism to facilitate review of existing rules outside of the authority 

under the Regulatory Flexibility Act.25 

Last year’s version of this report to Congress represented OIRA’s first effort to facilitate 

reviews of existing rules under the new statutory authority provided to OIRA. We requested that 

public commenters nominate specific existing rules that should be rescinded or changed to 

increase net benefits by reducing costs and/or increasing benefits. We called for such 

nominations in a Federal Register notice that also requested public comment on a draft version 

of the year 2001 report to Congress. We provided a suggested format for nominations in order to 

facilitate organized public comment and both OIRA and agency consideration of nominations. 

We believe that OIRA’s first effort at selected reviews of existing rules was partially 

successful but can be improved. There were a total of 71 specific nominations covering 17 

agencies suggested by 33 commentators. 

OIRA evaluated these nominations and assigned each nomination to one of three 

categories: (1) high priority, indicating that OIRA is inclined to agree with the comment and 

look into the suggestion, (2) medium priority, meaning that OIRA needs more information 

before it can give a clear indication of priority, and (3) low priority, meaning that OIRA is not 

convinced of the merits of the suggestion. There were a total of 23 nominations rated by OIRA 

as Ahigh priority.@ Appendix C to this report provides updated information about what agencies 

are doing about these 23 regulations. 

25Section 610 of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires agencies to review rules that have a 

significant economic impact on a substantial number of small entities within 10 years of their publication. 
33

 Eight of the 23 nominations address EPA rules while another five address rules that 

might be considered environmental in nature (i.e., those concerning DOI, DOE and USDA 

rules). An examination of OIRA’s decisionmaking process reveals no implicit or explicit intent 

to target environmental rules for scrutiny. In fact, the distribution of nominated rules by agency 

reflects the concerns raised by public comments, not the interests of OIRA. Of the 71 

nominations, over half (43) might be considered Aenvironmental@ regulations, a pattern that is 

unsurprising since Federal environmental regulation is of broad public interest and a source of 

persistent public controversy. OIRA was quite critical in its internal evaluation of all 

nominations, including those in the environmental arena. Only 13 of the 33 Aenvironmental@ rule 

nominations were rated as Ahigh priority@ for agency reconsideration. A review of these 13 

nominations reveals that some had already been established as an Administration priority for 

review. 

Response to Public Comments 

OIRA has referred to the Regulatory Right-to-Know Act as a statutory basis for eliciting 

public comment on recommended reforms to existing regulations. Several commenters 

questioned whether this statute provides this authority or whether Congress intended this 

particular use of the authority when the statute was adopted (77, 93). OIRA is confident that a 

plain reading of the statute authorizes what OIRA has done, but OIRA also notes that OMB has 

other executive and statutory authorities that could support an initiative to seek public comment 

about existing rules that need to be extended, modified or rescinded. One commenter (32) 

suggested that new legislation be adopted authorizing OIRA to force agencies to change existing 

rules. OIRA is not convinced that such legislation is necessary or appropriate at this time. 

Several commenters (69, 77, and 93) questioned last year’s public comment process 

because the Mercatus Center supplied a majority of the specific nominations for regulatory 

reform. OIRA believes this line of criticism is misplaced. If there was a problem in last year’s 

comment process, it was not that the Mercatus Center was too active but that other potential 

commenters were silent. OIRA expanded outreach considerably this year, and we are pleased 

that the number of commenters has exploded from 33 last year to roughly 1,700 this year. The 

organizational affiliations of the commenters and the topics of the reform nominations are also 

quite diverse. 

Several commenters suggested that OIRA’s discussion of regulatory reform go beyond 

improvement of specific regulations and include overarching reforms of the current system. 

Suggestions for consideration include enactment of a formal regulatory budget, better use of the 

annual Federal Regulatory Plan to analyze regulatory priorities (106), creation of task forces to 

analyze the impacts of multiple rules on a specific sector of the economy (106), and replacement 

of formal notice-and-comment procedures with participation mechanisms that promote citizen 

dialogue and cooperation (106). OIRA is considering whether to seek public comment on broadbased regulatory reforms. 
34

I. Formation of a Scientific Advisory Panel to OIRA 

 OIRA considered forming a scientific advisory panel to suggest initiatives to OIRA, 

evaluate OIRA’s ongoing activities, comment on national and international policy developments 

of interest to OIRA, and act as a resource and recruitment mechanism for OIRA staff. OIRA 

envisioned that the panel would be comprised of academics with specialized expertise in 

economics, administrative law, regulatory analysis, risk assessment, engineering, statistics, and 

health and medical science. The composition and formation of the panel would have complied 

with the guidance on competent and credible peer review mechanisms espoused by the OIRA 

Administrator in his September 20, 2001, memorandum to the President’s Management Council. 

For a variety of reasons, some mentioned in the comments and some related to limited resources, 

OIRA has decided not to proceed with a formal Scientific Advisory Panel at this time. 

Response to Public Comments 

Although several commenters endorsed the idea of a Scientific Advisory Panel to OIRA 

(12, 106), concerns were also raised (99) and there was opposition to the idea (74, 77). OIRA 

believes that its extensive use of public comment and expert peer review on this Report will 

provide OIRA with adequate input from the relevant scientific and technical communities. 

J. Agency Compliance with the Unfunded Mandates Reform Act 

In the 2001 report to Congress AMaking Sense of Regulation,@ OMB included its annual 

report to Congress on agency compliance with the Unfunded Mandates Reform Act in addition 

to OIRA=s report on the costs and benefits of regulations. This was done because the two reports 

together address many of the same issues and both highlight the need for regulating in a 

responsible manner that both accounts for the costs and benefits of rules and takes into 

consideration the interests of our intergovernmental partners. 

OIRA intends to continue to publish these two reports together. This year’s report 

contains information on the extent of consultations with State, local, and tribal governments 

through September 2001. The results of this work appear along with a discussion of any rules 

that imposed an unfunded mandate (defined in the Act as expenditures of $100 million or 

greater) between May 2001 and October 2001 in part 2 of this report. 

As noted in last year=s report, many of our intergovernmental partners felt that they were 

not being consulted sufficiently on those issues that matter most to them. The Office of 

Management and Budget is particularly interested in what State, local, and tribal governments 

perceive as failures in the consultation process. We invited public comment on these issues. The 

comments we received from states and localities on specific suggestions for regulatory reforms 

are discussed in Chapter 4. 
35

K. Summary Statistics on the Bush Administration=s Regulatory Record

 Basic statistics about regulatory transactions provide a crude indicator of the dynamics of 

regulatory activity at Federal agencies and OIRA. In Appendix D, we provide a statistical 

comparison of regulatory transactions (total and by agency) for calendar years 1998, 1999, 2000, 

and 2001. These data indicate that out of the roughly 4,500 regulatory actions that occur on 

average each year, about 500 are judged to be significant and a far smaller number, about 70, are 

judged to be economically significant. Only Asignificant@ actions are subject to OIRA review 

under E.O. 12866, and only the Aeconomically significant@ rules are required to be supported by a 

regulatory impact analysis. Ranked by the number of E.O. reviews at OIRA, the busiest 11 

regulatory agencies over the last four years are, in order: HHS, USDA, EPA, DOT, DOI, DOC, 

HUD, OPM, VA, DOJ, ED. Three agencies—HHS, EPA, and USDA—accounted for about 70 

percent of the economically significant rules. 
36

 

CHAPTER II: THE COSTS AND BENEFITS OF FEDERAL REGULATIONS

Section 624 of the FY 2001 Treasury and General Government Appropriations Act, the 

“Regulatory Right-to-Know Act,”26 requires OMB to submit "an accounting statement and 

associated report" including: 

(1) an estimate of the total annual costs and benefits (including quantifiable and 

nonquantifiable effects) of Federal rules and paperwork, to the extent feasible: 

(A) in the aggregate; 

(B) by agency and agency program; and 

(C) by major rule; 

(2) an analysis of impacts of Federal regulation on State, local, and tribal government, 

small business, wages, and economic growth; and 

3) recommendations for reform.27

This chapter presents the accounting statement. It revises the benefit-cost estimates in 

last year’s report by updating the estimates to the end of fiscal year 2001 (September 30, 2001). 

Since last year, we make three types of revisions. First, we include the costs and benefits of the 

economically significant rules reviewed by OMB between April 1, 1999 and September 30, 

2001. Second, we update our estimates to 2001 dollars from the 1996 dollars used in the four 

previous reports. Third, we revise our estimates (and the discussion of estimates) based on the 

public comments and peer reviews received on the draft report published on March 28, 2002. 

All of the estimates presented in this chapter are based on agency information or transparent 

modifications of agency information performed by OIRA. 

A. Estimates of the Total Costs and Benefits of Regulations Reviewed by OMB28

Table 7 presents estimates by agency of the costs and benefits of major rules reviewed by 

OMB over the period April 1, 1999 to September 30, 2001.29 We reviewed 118 final major rules 

over that period. Of the 118 rules, 72 implemented Federal budgetary programs, which caused 

income transfers from one group to another, and 46 imposed mandates on State and local entities 

or the private sector.30 Of these 46 “social regulations,” we are able to present estimates of both 

2631 U.S.C. § 1105 note, Pub. L. 106-554, ' 1(a) (3) [Title VI, ' 624], Dec. 21, 2000, 114 Stat. 2763, 2763A-161 

(see Appendix F). 

27Recommendations for reform are discussed in Chapter IV.

28In our previous four reports, we presented detailed discussions about the difficulty of estimating and aggregating 

the costs and benefits of different regulations over long time periods and across many agencies. We do not repeat 

those discussions here. Our previous reports are on our website at 

<http://www.whitehouse.gov/omb/inforeg/regpol.html>. 

29The list of major rules and their individual cost and benefit estimates and discussion of the assumptions and 

calculations used to derive the estimates are in Appendix E. 

30Rules that transfer Federal dollars among parties are not included because transfers are not social costs or benefits. 

If included, they would add equal amounts to benefits and costs. 
37

 

monetized costs and benefits for 20 rules.31 Seven agencies issued major regulations adding 

from $33 billion to $54 billion annual benefits and from $16 billion to $19 billion annual costs 

over the 30-month period. About 75 percent of the benefits and 65 percent of the costs were 

attributed to the actions of one agency: EPA. 

Table 8 presents estimates for six-and-a-half years by expanding the period covered by 

Table 7 by four years to April 1, 1995, the first year that OMB began to accumulate this 

information.32 Table 8 contains an estimate of the total costs and benefits of all regulations 

reviewed by OMB over this period that met two conditions. Each rule generated costs or 

benefits of at least $100 million annually and its costs and benefits were quantified and 

monetized by the agency or, in some cases, by OMB. The estimates are therefore not a complete 

accounting of all the costs and benefits of all regulations issued by the Federal government 

during this period. 

Based on the information released in previous reports, the total costs and benefits of all 

Federal rules now in effect (major and non-major, including those adopted more than 10 years 

ago) could easily be a factor of ten or more larger than the sum of the costs and benefits reported 

in Table 8. More research is necessary to provide a stronger analytic foundation for 

comprehensive estimates of total costs and benefits by agency and program. OMB’s 

examination of the benefits and costs of Federal regulation supports the need for a commonsense approach to modernizing Federal regulation that involves the expansion, modification, and 

rescission of regulatory programs, as appropriate. 

Response to Public Comments on Estimates for Major Rules (April 1, 1995 to September 30, 

2001) 

Several commenters questioned the quality, completeness, and transparency of these 

estimates (70, 79, 80, 93, 99, and 104). Some commenters stated that cost-benefit analysis is 

inherently biased because costs are systematically overstated and benefits undervalued (70, 80). 

OMB believes that both benefit and costs estimates are subject to unknown biases. OMB’s 

guidelines are dedicated to reducing biases through promotion of consistent and well-grounded 

practices. A key provision of the Regulatory Right-to-Know Act authorizes OMB to issue 

guidelines to agencies to standardize measures of costs and benefits. Elsewhere in this report we 

describe our efforts to improve the quality of information, including information about the costs 

and benefits of regulations. 

31We used agency estimates where available. If an agency quantified estimates but did not monetize, we used 

standard assumptions to monetize as explained in Appendix E. The 26 rules that we did not include are rules that 

did not have monetized estimates for either costs or benefits or both. 

32Table 8 is the sum of Table 7 in this report and Table 5 from the 2000 report (OMB 2000) after converting to 2001 

dollars and excluding four regulations to prevent double counting: emission standards for heavy duty engines, 

voluntary standards for light-duty vehicles, and the NAAQS ozone and particulate matter rules. The reasons for 

excluding the four rules are explained in Appendix E. The calculations for Tables 5 and 6 from the draft report are 

explained in Appendix E and in previous reports. Two other rules reviewed by OMB are not included: OSHA’s 

ergonomics rule that was overturned by Congress under the Congressional Review Act and FDA’s tobacco rule that 

was overturned by the Supreme Court. 
38

Other commenters pointed out that the cost and benefit estimates present only a partial 

picture of the impact of Federal regulations over this period (73, 78, 104). This is correct. We 

have added further explanation and disclaimers to the text and tables to make this clear. Table 8 

is based on the 67 major regulations (1995-2001) for which the agencies and OMB had sufficient 

information on both costs and benefit to enable us to present dollar estimates. These 67 

regulations are about half of the major social regulations and about four percent of the total final 

regulations that OMB reviewed over this six-and-one-half-year period. In addition, not all of the 

costs and benefits of the 67 regulations could be quantified and monetized. OMB does not 

review regulations of the independent agencies or any regulations that are not determined to be 

“significant” under the E.O. 12866 definition. These 67 regulations make up only one percent of 

all final regulations issued during the last six years. OMB believes that major (economically 

significant) rules account for the vast majority of the total costs of Federal regulation, even 

though most Federal rules are not considered major. 

 Finally, some commenters criticized the tables because of the difficulty of reproducing 

them (99, 104). Part of the problem is that the discussions of the calculations for the 67 

regulations are contained in five OMB reports issued since 1997. Most of the input data were 

extracted from the 67 individual regulatory impact analyses produced by the agencies and 

reviewed by OMB. The five OMB reports, which are all on our website, provide the necessary 

information to reproduce our calculations. The 67 RIAs issued over the last six-and-a-half years 

are more difficult to access, because they must be obtained from numerous Federal agencies, but 

they are all publicly available documents. Looking forward, we intend to work with agencies to 

make more RIAs readily available over the Internet. 

Table 7: Estimates of the Annual Costs and Benefits of Major Federal Rules, 

April 1, 1999 to September 30, 2001

(millions of 2001 dollars) 

Agency Costs Benefits 

Agriculture 814 < 1 

Energy 1,520 3,110 

Health &Human Services 2,400 5,792 

Housing & Urban Development 150 190 

Labor 78 167 

Transportation 400 to 2,000 140 to 1,600 

Environmental Protection Agency 11,380 to 12,812 25,338 to 56,141 

Total 16,744 to 19,774 34,737 to 67,000 
39

Table 8: Estimates of the Annual Costs and Benefits of Major Federal Rules, 

April 1, 1995 to September 30, 2001

(millions of 2001 dollars) 

Agency Costs Benefits 

Agriculture 2,249 to 2,271 2,938 to 5,989 

Education 362 to 610 655 to 814 

Energy 1,836 3,991 to 4,059 

Health &Human Services 2,988 to 3,067 8,165 to 9,182 

Housing & Urban Development 150 190 

Labor 361 1,173 to 3,557 

Transportation 1,756 to 3,808 2,400 to 4,312 

Environmental Protection Agency 40,683 to 41,356 28,540 to 73,892 

Total 50,385 to 53,459 48,052 to 101,975 

 In Appendix C of the draft report, published in the Federal Register on March 28, 2002, 

we provided revised estimates of the costs and benefits of social regulation (health, safety and 

environmental regulation) in the aggregate and by agency as of September 30, 2001.33 We also 

included estimates of the aggregate costs of economic and process regulation in Appendix C.34 

We included these aggregate estimates in the appendix rather than the text to emphasize the 

quality differences in the two sets of estimates. The estimates of the costs and benefits of 

Federal regulations over the period April 1, 1995, to March 31, 2001, are based on agency 

analyses subject to public notice and comments and OMB review under E.O. 12866. The 

estimates in the draft report for earlier regulations were based on studies of varying quality. 

Some are first-rate studies published in peer reviewed journals. Others are non-random surveys 

of questionable methodology. And some estimates are based on studies completed 20 years ago 

for regulations issued over 30 years ago, whose precise costs and benefits today are unknown. 

Response to Public Comments on Aggregate Estimates

Our decision to de-emphasize older (pre-1995) benefit-cost information struck a 

responsive cord with commenters. The majority of comments from differing perspectives that 

opined on this change agreed that the differences in the quality of the data merited different 

treatment (12, 72, 77, 79, 80, 82, 85, 93, 99, and 104). One commenter, a peer reviewer (85), 

described our change this way: “OMB dramatically changed its approach to estimating the 

aggregate costs and benefits of regulation in this report. Instead of combining estimates from 

other published work, it relied on its own database of regulations from April 1, 1995 through 

September 30, 2001.” The commenter than expressed the opinion: “We think this approach is 

preferable for OMB. ... This simplified and less ambitious handling of aggregates makes the 

 

33We calculated these estimates by adding the estimates in Table 7 above to Table 5 of the 2000 OMB report and 

updating Table 4’s 1996 dollars to 2001 dollars using the Consumer Price Index. 

34Economic regulation restricts the price or quantity of a product or service that firms produce and/or restrict 

whether firms can enter or exit specific industries. Process regulations impose paperwork burdens on the public by 

establishing and verifying conditions for participation in government programs or payment of taxes.
40

 

information in this year’s report more credible and useful.” Other commenters went further. 

Another peer reviewer (104) stated: “In spite of its breadth and imagination, however, the 

technical analysis and quantitative aggregations on the draft report are generally of poor quality 

and in my view do not meet the standards for publication in the peer reviewed journals with 

which I am familiar.” Our accounting statement in this final report is responsive to such 

concerns. 

Several commenters expressed the opinion that the aggregate estimates in the draft report 

would not meet OMB’s data quality guidelines for reproducibility and transparency (12, 79, 80, 

93, and 99) but recommended different courses of action. One suggested we should attempt to 

improve our efforts at consistency and standardization (12), others that we should provide strong 

disclaimers in all of the tables (79, 104) and still others that we should not report aggregate 

estimates based on existing inadequate studies (72, 77, 80, 93). One commenter, an agency (99), 

suggested that OMB’s estimates in the draft report differed from its own estimates and do not 

meet OMB’s data quality guidelines. 

 

Part of the reproducibility and transparency problem with the aggregate estimates 

reported in the draft report is that this is the fifth report in a series that builds on the estimates in 

the previous reports. One needs all five volumes to trace back the estimates to the original 

underlying studies. A second part of the problem, as the draft and previous four reports point out, 

is that many of the underlying studies are old and may no longer be reliable indicators of today’s 

regulatory costs and benefits. 

A researcher in the field (82) pointed out that aggregate estimates are not the simple sum 

of individual estimates and that major distortions can occur when estimates are simply added 

together. A basic assumption of economic analysis is that the changes analyzed must be 

marginal (small)—relative to average household income—for the estimates to have economic 

validity. For example, benefit estimates are based on the willingness of households to pay for the 

policy changes. Yet the “willingness” is constrained by a household’s ability to pay. Table 13 in 

the draft report indicates that the benefits of social regulation may be as high as $2 trillion, which 

is about $20,000 per household. This implies that the average household is willing and able to 

pay—every year—about half of its after-tax income for health, safety and environmental 

regulation--an implausible implication.35 On the other hand several commenters urged us to keep 

and improve our aggregate estimates (73, 107). They emphasized the importance of 

understanding the magnitude of the costs and benefits of regulations for the overall conduct of 

economic policy. We find both viewpoints about the value of these estimates to be persuasive. 

In our future annual reports, we plan to improve the estimates by focusing on the last ten 

years of major Federal regulations. We plan to expand the number of years covered by our 

estimates of the costs and benefits of major rules to ten from the six-and-a-half currently 

included in Table 8. We do not believe that the estimates of the costs and benefits of regulations 

issued over ten years ago are reliable or very useful for informing current policy decisions. 

35Data are from page 435 of the Statistical Abstract of the United States: 2001. 
41

 

Some observers see a complete “accounting statement”—one that includes all existing 

rules on the books—as a necessary condition for enactment of a “regulatory budget.” The idea is 

that Congress might be expected to authorize each year a total regulatory budget, much like 

Congress now passes an appropriation for an agency’s “on-budget” expenses. Although the idea 

of a regulatory budget is worthy of consideration, we do not believe that a complete accounting 

statement is necessary to move forward with the idea. A regulatory budget need only be 

incremental to the current baseline. One does not need to know full costs and benefits of all 

regulations to decide that regulatory costs should be held to an increase (or decrease) of a 

specified amount over the next year. In fact, most Federal budgeting is incremental in nature. 

In keeping with the spirit of OMB’s new information-quality guidelines, we have decided 

not to reproduce the aggregate estimates that were contained in Appendix C of the draft report. 

As suggested, we have also moved the analysis of the impacts of Federal regulation on State, 

local, and tribal governments, small business, wages, and economic growth that was in Appendix 

C of the draft report into this chapter, as presented below. 

B. Impacts of Federal Regulations 

Sec. 638 (a)(2) of the Regulatory Right-to-Know Act calls on OMB to present an analysis 

of the impacts of Federal regulation on State, local, and tribal governments, small business, 

wages, and economic growth. We summarize the limited additional information that has become 

available since publication of last year’s report. 

Impacts on State, Local, and Tribal Governments 

Over the past six years, six rules have imposed costs of more than $100 million per year 

on State, local, and tribal governments (and thus have been classified as public sector mandates 

under the Unfunded Mandates Act of 1995).36 The Environmental Protection Agency issued all 

five of these rules, which are described in some detail below. 

• EPA’s Rule on Standards of Performance for Municipal Waste Combustors and 

Emissions Guidelines (1995): This rule set standards of performance for new municipal 

waste combustor (MWC) units and emission guidelines for existing MWCs under 

sections 111 and 129 of the Clean Air Act [42 U.S.C. 7411, 42 U.S.C. 7429]. The 

standards and guidelines apply to MWC units at plants with combustion capacities 

greater than 35 mega grams per day (Mg/day) (approximately 40 tons per day) of 

municipal solid waste (MSW). The EPA standards require sources to achieve the 

maximum degree of reduction in emissions of air pollutants that the Administrator 

36EPA’s proposed rules setting air quality standards for ozone and particulate matter may ultimately lead to 

expenditures by State, local or tribal governments of $100 million or more. However, Title II of the Unfunded 

Mandates Reform Act provides that agency statements of compliance with Section 202 must be conducted Aunless 

otherwise prohibited by law.@ The conference report to this legislation indicates that this language means that the 

section Adoes not require the preparation of any estimate or analysis if the agency is prohibited by law from 

considering the estimate or analysis in adopting the rule.@ EPA has stated, and the courts have affirmed, that under 

the Clean Air Act, the primary air quality standards are health-based and EPA is not to consider costs. 
42

determined is achievable, taking into consideration the cost of achieving such emissions 

reduction, and any non-air quality health and environmental impacts and energy 

requirements. 

EPA estimated the annualized costs of the emissions standards and guidelines to be $320 

million per year (in constant 1990 dollars) over existing regulations. While EPA 

estimated the cost of such standards for new sources to be $43 million per year, the cost 

existing sources was $277 million per year. The annual emissions reductions achieved 

through this regulatory action include, for example, 21,000 Mg. of sulfur dioxide; 2,800 

Mg. of particulate matter (PM); 19,200 Mg of nitrogen oxides; 54 Mg. of mercury; and 

41 Kg. of dioxins/furans. 

• EPA’s Standards of Performance for New Stationary Sources and Guidelines for Control 

of Existing Sources: Municipal Solid Waste Landfills (1996): This rule set performance 

standards for new municipal solid waste landfills and emission guidelines for existing 

municipal solid waste landfills under section 111 of the Clean Air Act. The rule 

addressed non-methane organic compounds (NMOC) and methane emissions. NMOC 

include volatile organic compounds (VOC), hazardous air pollutants (HAPs), and 

odorous compounds. Of the landfills required to install controls, about 30 percent of the 

existing landfills and 20 percent of the new landfills are privately owned. The remaining 

landfills are publicly owned. The total annualized costs for collection and control of air 

emissions from new and existing MSW landfills are estimated to be $100. 

• National Primary Drinking Water Regulations: Disinfectants and Disinfection 

Byproducts (1998): This rule promulgates health-based maximum contaminant level 

goals (MCLGs) and enforceable maximum contaminant levels (MCLs) for about a dozen 

disinfectants and byproducts that result from the interaction of these disinfectants with 

organic compounds in drinking water. The rule will require additional treatment at about 

14,000 of the estimated 75,000 covered water systems nationwide. The costs of the rule 

are estimated at $700 million annually. The quantified benefits estimates range from zero 

to 9,300 avoided bladder cancer cases annually, with an estimated monetized value of $0 

to $4 billion per year. Possible reductions in rectal and colon cancer and adverse 

reproductive and developmental effects were not quantified. 

• National Primary Drinking Water Regulations: Interim Enhanced Surface Water 

Treatment (1998): This rule establishes new treatment and monitoring requirements 

(primarily related to filtration) for drinking water systems that use surface water as their 

source and serve more than 10,000 people. The purpose of the rule is to enhance health 

protection against potentially harmful microbial contaminants. EPA estimated that the 

rule will impose total annual costs of $300 million per year. The rule is expected to 

require treatment changes at about half of the 1,400 large surface water systems, at an 

annual cost of $190 million. Monitoring requirements add $96 million per year in 

additional costs. All systems will also have to perform enhanced monitoring of filter 

performance. The estimated benefits include average reductions of 110,000 to 338,000 
43

cases of cryptosporidiosis annually, with an estimated monetized value of $0.5 to $1.5 

billions, and possible reductions in the incidence of other waterborne diseases. 

• National Pollutant Discharge Elimination: System B Regulations for Revision of the 

Water Pollution Control Program Addressing Storm Water Discharges (1999): This rule 

expands the existing National Pollutant Discharge Elimination System program for storm 

water control. It covers smaller municipal storm sewer systems and construction sites 

that disturb one to five acres. The rule allows for the exclusion of certain sources from 

the program based on a demonstration of the lack of impact on water quality. EPA 

estimates that the total cost of the rule on Federal and State levels of government, and on 

the private sector, is $803.1 million annually. EPA considered alternatives to the rule, 

including the option of not regulating, but found that the rule was the option that was 

“most cost effective or least burdensome, but also protective of the water quality.” 

• National Primary Drinking Water Regulations; Arsenic and Clarifications to Compliance 

and New Source Contaminants Monitoring (2001): This rule reduces the amount of 

arsenic that is allowed to be in drinking water from 50 ppb to 10 ppb. It also revises 

current monitoring requirements and requires non-transient, non-community water 

systems to come into compliance with the standard. This rule may affect either State, 

local or tribal governments or the private sector at an approximate annualized cost of 

$206 million. The monetized benefits of the rule range from $140 to $198 million per 

year. The EPA selected a standard of 10 ppb because it determined that this was the level 

that best maximizes health risk reduction benefits at a cost that is justified by the benefits, 

as required by the Safe Drinking Water Act. 

Although these six EPA rules were the only ones over the past six years to require 

expenditures by State, local and Tribal governments exceeding $100 million, they were not the 

only rules with impacts on other levels of governments. For example, 14 percent, 9 percent, and 

6 percent of rules listed in the April 2001 Unified Regulatory Agenda cited some impact on 

State, local or tribal governments, respectively. 

In Part 2 of the report, we present a full discussion of agency compliance with the 

Unfunded Mandates Reform Act. 

Impact on Small Business

The need to be sensitive to the impact of regulations and paperwork on small business 

was recognized in Executive Order 12866, “Regulatory Planning and Review.” The Executive 

Order calls on the agencies to tailor their regulations by business size in order to impose the least 

burden on society, consistent with obtaining the regulatory objectives. It also calls for the 

development of short forms and other efficient regulatory approaches for small businesses and 

other entities. Moreover, in the findings section of the Small Business Regulatory Enforcement 

Fairness Act of 1996 (SBREFA), Congress stated that “... small businesses bear a 

disproportionate share of regulatory costs and burdens.” This is largely attributable to fixed 

costs—costs that all firms must bear regardless of size. Each firm has to determine whether a 
44

 

regulation applies, how to comply, and whether it is in compliance. As firms increase in size, 

fixed costs are spread over a larger revenue and employee base resulting in lower unit costs. 

This observation is supported by empirical information from a study sponsored by the 

Office of Advocacy of the Small Business Administration (Crain and Hopkins 2001). That study 

found that regulatory costs per employee decline as firm size—as measured by the number of 

employees per firm—increases. Crain and Hopkins (2001) estimate that the total cost of Federal 

regulation (environmental, workplace, economic, and tax compliance regulation) was 60 percent 

greater per employee for firms with under 20 employees compared to firms with over 500 

employees. The average per employee regulatory costs were $6,975 for firms with fewer than 20 

employees compared to $4,463 for firms with over 500 employees. These findings are based on 

their overall estimate of the cost of Federal regulation for 2000 of $843 billion.37 

These results do not indicate whether reducing regulatory requirements on small firms 

would produce net positive benefits. That depends upon the differences between relative 

benefits per dollar of cost by firm size, not on differences in costs per employee. If benefits per 

dollar of cost are smaller for small firms than large firms, then decreasing requirements for small 

firms while increasing them for large firms should increase net benefits. The reverse may be true 

in some cases. 

Impact on Wages

The impact of Federal regulations on wages depends upon how “wages” are defined and 

on the types of regulations involved. If we define “wages” narrowly as workers’ take-home pay, 

social regulation usually decreases average wage rates, while economic regulation often 

increases them, especially for specific groups of workers. If we define “wages” more broadly as 

the real value or utility of workers’ income, the directions of the effects of the two types of 

regulation can be reversed. 

1. Social Regulation 

By broad measures of welfare, social regulation—defined as rules designed to improve 

health, safety, and the environment—create benefits for workers and consumers. Compliance 

costs, however, must be paid for by some combination of workers, business owners, and/or 

consumers through adjustments in wages, profits, and/or prices. This effect is most clearly 

recognized for occupational health and safety standards. As one leading textbook in labor 

economics suggests: “Thus, whether in the form of smaller wage increases, more difficult 

working conditions, or inability to obtain or retain one’s first choice in a job, the costs of 

compliance with health standards will fall on employees.”38

Viewed in terms of overall welfare, the regulatory benefits of health, safety, and 

environmental improvements for workers can outweigh their costs, assuming the regulation 

37See Crain and Hopkins, “The Impact of Regulatory Costs for Small Firms,” SBA, Office of Advocacy, 2001. 38From Ehrenberg and Smith’s Modern Labor Economics, p. 279. 
45

 

produces net benefits. In the occupational health standards case, where the benefits of regulation 

accrue mostly to workers, workers are likely to be better off if health benefits exceed compliance 

costs and such costs are not borne primarily by workers.39 Although wages may reflect the cost 

of compliance with health and safety rules, the job safety and other benefits of such regulation 

can compensate for the monetary loss. Workers, as consumers benefiting from safer products 

and a cleaner environment, may also come out ahead if regulation produces significant net 

benefits for society. 

2. Economic Regulation 

For economic regulation, defined as rules designed to set prices or conditions of entry for 

specific sectors, the effects on wages may be positive or negative. Economic regulation can 

result in increases in income (narrowly defined) for workers in the regulated industries, but 

decreases in broader measures of income based on utility or overall welfare, especially for 

workers in general. Economic regulation is often used to protect industries and their workers 

from competition. Examples include the airline and trucking industries in the 1970s and trade 

protection, today. These wage gains come at a cost in inefficiency from reduced competition, 

however, which consumers must bear. Moreover, growth in real wages, which are limited 

generally by productivity increases, will not grow as fast without the stimulation of outside 

competition.40 

These statements are generalizations of the impact of regulation in the aggregate or by 

broad categories. Specific regulations can increase or decrease the overall level of benefits 

accruing to workers depending upon the actual circumstances and whether net benefits are 

produced. 

Economic Growth 

The conventional measurement of gross domestic product (GDP) does not take into 

account fully the market value of improvements in health, safety, and the environment. It does 

incorporate the direct compliance costs of social regulation. Accordingly, conventional 

measurement of GDP can suggest that regulation reduces economic growth.41 In fact, sensible 

regulation and economic growth are not inconsistent once all benefits are taken into account. By 

the same token, inefficient regulation reduces true economic growth. 

The OECD (1999) estimates that the economic deregulation that occurred in the United 

States over the last 20 years permanently increased measured GDP by 2 percent. The OECD 

39Based on a cost benefit analysis of OSHA’s 1972 Asbestos regulation by Settle (1975), which found large net 

benefits, Ehrenberg and Smith cite this regulation as a case where workers’ wages were reduced, but they were 

made better off because of improved health (p. 281). 

40Winston (1998) estimates that real operating costs declined 25 to 75 percent in the sectors that were deregulated 

over the last 20 years—transportation, energy, and telecommunications. 41Social regulation reduces measured growth by diverting resources from the production of goods and services that 

are counted in GDP to the production or enhancement of “goods and services” such as longevity, health, and 

environmental quality that generally are not fully counted in GDP. 
46

 

also estimates that further deregulation of the transportation, energy, and telecommunication 

sectors would increase U.S. GDP by another 1 percent. Jaffe, Peterson, Portney, and Stavins 

(1995) surveyed the evidence of the effects of environmental regulation on economic growth and 

concluded as follows: “Empirical analyses of the productivity effects have found modest adverse 

impacts of environmental regulation.” Based on the studies that tried to explain the decline in 

productivity that occurred in the US during the 1970s, they placed the range attributable to 

environmental regulation from 8 percent to 16 percent (p. 151). 

As indicated above, measured GDP growth does not take into account fully the market 

value of improvements in health, safety, and the environment that social regulation has brought 

us. If even lower-range estimates of the benefits of social regulation are added to GDP, then a 

more comprehensive measure of GDP, one that includes the value of nonmarket goods and 

services provided by regulation, would be about 3 percent greater.42 Focusing on the effect of 

social regulation on measured economic growth is misleading since it does not take into account 

the full benefits of regulation. 

More important than knowing the impact of regulation in general on growth is the impact 

of specific regulations and alternative regulatory designs on economic growth. As Jaffe et al put 

it: “Any discussion of the productivity impacts of environmental protection efforts should 

recognize that not all environmental regulations are created equal in terms of their costs or their 

benefits” (p. 152). 

In this regard, market-based or economic-incentive regulations will tend to be more costeffective than those requiring specific technologies or engineering solutions. Under marketbased regulation, profit-maximizing firms have strong incentives to find the cheapest way to 

produce the social benefits called for by regulation. Choosing the right regulatory instrument 

can go a long way toward reducing any negative impacts on economic growth while increasing 

the overall long-run benefits to society. 

C. Estimates of Benefits and Costs of This Year’s “Major” Rules

In this section, we examine the benefits and costs of each “major” rule, as required by 

section 624(a)(1)(C). We have included in our review those final regulations on which OMB 

concluded review during the 18-month period April 1, 2000, through September 30, 2001. We 

used an 18-month period this year to transition to a fiscal year reporting period. The four 

previous reports used a “regulatory year,” ending on March 31st. 

The statutory language categorizing the rules we consider for this report differs from the 

definition of “economically significant” in Executive Order 12866 (section 3(f)(1)). It also 

differs from similar statutory definitions in the Unfunded Mandates Reform Act and subtitle E of 

the Small Business Regulatory Enforcement Fairness Act of 1996—Congressional Review of 

42Including the value of increasing life expectancy in the GDP was first proposed and estimated in 1973 by D. Usher 

in AAn Imputation to the Measure of Economic Growth for Changes in Life Expectancy@ NBER Conference on 

Research in Income and Wealth. 
47

Agency Rulemaking. Given these varying definitions, we interpreted section 624(a)(1)(C) 

broadly to include all final rules promulgated by an Executive branch agency that meet any one 

of the following three measures: 

• rules designated as “economically significant” under section 3(f)(1) of Executive Order 

12866; 

• rules designated as “major” under 5 U.S.C. ' 804(2) (Congressional Review Act); and 

• rules designated as meeting the threshold under Title II of the Unfunded Mandates 

Reform Act (2 U.S.C. ' 1531 - 1538) 

We also include a discussion of major rules issued by independent regulatory agencies, 

although OMB does not review these rules under Executive Order 12866. This discussion is 

based on data provided by these agencies to the General Accounting Office (GAO) under the 

Congressional Review Act that met the criteria noted above. Of these rules, USDA submitted 

nineteen; the DOC, DOE, Social Security Administration, and Federal Emergency Management 

Administration, each submitted three; HHS twenty-two; DOL eight; Treasury, DOJ, 

Architectural and Transportation Barriers Compliance Board (ATBCB), DOD, the Office 

Federal Housing Enterprise Oversight, Veterans Administration, Office of Personnel 

Management each submitted one; DOI five; DOT four; EPA seven; SBA and FAR two. One of 

these rules was a common rule issued by three agencies: DOL, HHS and Treasury. These 86 

rules represent less than 20 percent of the final rules reviewed by OMB during this period. 

Social Regulation 

Of the 87 economically significant rules reviewed by OMB, 34 are regulations requiring 

substantial additional private expenditures and/or providing new social benefits. Table 9 

summarizes the costs and benefits of these rules and provides “other information” taken from 

rule preambles and agency RIAs. EPA submitted seven; DOI, DOL and HHS each submitted 

five; USDA, DOC, DOE each submitted three; DOT two; DOJ, Treasury and ATBCB each 

submitted one. Agency estimates and discussion are presented in a variety of ways, ranging 

from a mostly qualitative discussion, for example, the USDA’s National Organic Program rule 

where all of the benefits and costs except for the recordkeeping component were discussed 

qualitatively, to a more complete benefit-cost analysis such as the EPA’s heavy-duty engine and 

vehicle rule. 

1. Benefits Analysis. 

Agencies monetized at least some benefit estimates for 19 of the 34 rules including: (1) 

EPA’s estimate of $70.4 billion in 2030 primarily from reduced PM exposure from diesel fuel; 

(2) DOE’s present value estimate of $8.6 billion from 2004 through 2030 in energy savings from 

water heater energy conservation; and (3) DOI’s estimate of $50 million to $192 million per year 

in benefits from its migratory bird hunting regulations. In one case, the agency provides some of 

the benefit estimates in monetized and quantified form, but discusses other benefits qualitatively. 
48

Namely, USDA estimated that the Roadless Area Conservation rule will save $219,000 per year 

from reduced road maintenance but did not quantify the benefits associated with projected 

increases in air and water quality and biodiversity. In three cases, the agencies did not monetize 

all of the quantified benefits. For example, DOE quantified and monetized the energy saving 

benefits from its three energy conservation standards, but did not monetize the projected 

reductions in nitrogen oxide emissions. In 14 cases, agencies did not report any quantified or 

monetized benefit estimates. 

2. Cost Analysis. 

For 26 of the 34 rules, agencies provided monetized cost estimates. These include such 

items as HHS’s estimate of $56 million in the first year and $10 million annually thereafter as 

the cost of labeling shell eggs. For the remaining seven rules, DOI’s four migratory bird hunting 

rules, DOC’s two emergency fishery management rules, and DOT’s light truck fuel economy 

rule, the agencies did not estimate costs. 

3. Net Monetized Benefits. 

Twelve of the 34 rules provided at least some monetized estimates of both benefits and 

costs. Of these, the estimated monetized benefits of nine of the rules unambiguously exceed the 

estimated monetized costs. The magnitude of the net benefits varies from less than $100 million 

per year to $66 billion per year. Two rules have negative net monetized benefits with variation 

ranging from approximately $10 million per year to $70 million per year. One rule yielded an 

estimate that included the possibility of positive or negative net benefits. EPA estimated that the 

expected benefits from identifying dangerous levels of lead range from $45 billion to $176 

billion over 50 years depending on the underlying model, resulting in the net benefit estimates 

ranging from negative $25 billion to $106 billion. 

The presentation of the monetized benefits and costs varied. Five rules presented both 

benefits and costs in present value terms, whereas two rules used annualized forms. Four rules 

presented the estimated benefits in annualized forms and the costs in annual form. This 

distinction is important since annualized form smoothes the projected streams of benefits and 

costs evenly over a period of time while the annual form does not. The annual form allows the 

reader to glean information on not only how much—but when—benefits and costs are likely to 

accrue. 

4. Rules without Quantified Effects. 

Three of the rules in Table 9 are classified as economically significant even though the 

agency did not provide any quantified estimates of their effects. 

DOC - Steller Sea Lion Protection Measures for the Groundfish Fisheries Off Alaska: Based 

upon publicly available information, OMB determined that rules covering these species were 

major. 
49

DOC - Annual Framework Adjustment (framework 14) for the Atlantic Sea Scallop Fishery 

Management Plan for 2001: Based upon publicly available information, OMB determined that 

rules covering these species were major. 

DOT - Light Truck CAFE: For each model year, DOT must establish a corporate average fuel 

economy (CAFE) standard for light trucks, including sport-utility vehicles and minivans. (DOT 

also sets a separate standard for passenger cars, but is not required to revisit the standard each 

year.) For the past five years, however, appropriations language has prohibited NHTSA from 

spending any funds to change the standards. In effect, it has frozen the light truck standard at its 

existing level of 20.7 miles per gallon (mpg) and has prohibited NHTSA from analyzing effects 

at either that or alternative levels. Although DOT did not estimate the benefits and costs of the 

standards, the agency’s experience in previous years indicates that they may be substantial. Over 

5 million new light trucks are subject to these standards each year, and the 20.7 mpg standard is 

binding on several manufacturers. In view of these likely, substantial effects, we designated the 

rule as economically significant even though DOT was prohibited by law from changing the 

standards. 
Table 9. Summary of Agency Estimates for Final Rules 4/1/00 - 9/30/01 

(As of date of completion of OMB review.)

AGENCY RULE BENEFITS COSTS OTHER INFORMATI

USDA Roadless Area 

Conservation 

Estimated$219,000/yearcost savings fromreduced roadmaintenance activities 

Loss of $56.9 million (direct) and $164 million(total) per year in the short term, with an additional impact of $12.4 million (direct) and $20.2 million(total) per year in the longterm

Monetized costs include an estimated 1,054 direcrelated to road construction, timber harvesting, awith an additional 308 direct and 509 total jobs l3268 - 3269] Other costs include the following: "phosphate and 308 - 1,371 million tons of coal wfor development. About 11.3 trillion cubic feet omillion barrels of undiscovered oil resources may 3269] A variety of other nonquantified benefits wpreamble to the final rule, such as maintenance orecreational opportunities, wildlife habitat, and li

USDA National Organic

Program

Not estimated $13 million/yr for 

recordkeeping; others notestimated

“Because basic market data on the prices and quand the costs of organic production are limited, iquantitative estimates of all benefits and costs of Consequently, the analysis does not estimate the (positive or negative) of net benefits.” [65FR806

USDA Retained Water in

Raw Meat and Poultry Products 

Not estimated $110 million “Consumers will benefit from the additional info

that will be provided as a result of the labeling reon retained water should contribute to a sounder decisions. Consumers are currently not being infretained water. Consumers will benefit from havproduct quantity in terms of meat or poultry mea

DOC Annual Framework

Adjustment (framework 14) for the Atlantic sea scallop fisherymanagement plan for 2001

Not estimated Not estimated
Table 9. Summary of Agency Estimates for Final Rules 4/1/00 - 9/30/01 

(As of date of completion of OMB review.)

AGENCY RULE BENEFITS COSTS OTHER INFORMATI

DOC Closure of Critical

Habitat Pursuant to a Court Order 

Not estimated Up to $88 million “NMFS estimates that the potential economic los

habitat to pollock trawling from June through Dehigh as $88 million. Industry has estimated that iplace through the A/B seasons, loses could be as [65FR 49769] 

DOC Steller Sea 

Lion Protection Measures for the Groundfish FisheriesOff Alaska 

Not estimated Not estimated “NMFS issues an emergency interim rule to imp

protection measures to avoid the likelihood that tAlaska will jeopardize the continued existence oSteller sea lions or adversely modify its critical hmeasures will disperse fishing effort over time anprotection from fisheries competition for prey in rookeries and important haulouts”.[66FR7276]

DOE Energy Conservation

Standards for Fluorescent LampBallasts 

$3.51 billion(present value) in energy savingsbetween 2005 and2030

$.9 billion (present value) for purchases between 2005 and 2030 

DOE projects a cumulative reduction in nitrogen thousand metric tons (undiscounted) over the percumulative reduction in carbon dioxide equivalemetric tons (undiscounted) over the period 2005-

DOE Energy Conservation

Standards for Water Heaters 

$8.6 billion (present value) in energy savingsbetween 2004 and2030

$6.4 billion (present value) for purchases between 2004 and 2030 

DOE projects a cumulative reduction in nitrogen thousand metric tons discounted over the period cumulative reduction in carbon dioxide equivalemetric tons discounted over the period 2004-202

DOE Energy Conservation

Standards for Clothes Washers 

$27.2 billion(present value) in energy and water savings between 2004 and 2030 

$11.9 billion (presentvalue) for purchases between 2004 and 2030 

DOE projects a cumulative reduction in nitrogen thousand metric tons discounted over the period cumulative reduction in carbon dioxide equivalemetric tons discounted over the period 2004 202
Table 9. Summary of Agency Estimates for Final Rules 4/1/00 - 9/30/01 

(As of date of completion of OMB review.)

AGENCY RULE BENEFITS COSTS OTHER INFORMATI

HHS 

Health Insurance Reform: Standards forElectronicTransactions 

$36.9 billion over 10 years 

$7 billion over 10 years “The costs of implementing the standards specifi

primarily one-time or short-term costs related to include system conversion/upgrade costs, start-utraining costs, and costs associated with implemecosts will be incurred during the first three years benefits of EDI include reduction in manual data service delays, elimination of the costs associateforms, and the enhanced ability of participants in each other.” [65FR50351] The discounted present value of the savings is $1Furthermore, the updated impact analysis still prestimate of the impact of administrative simplificnew impact analysis assumes that over the ten-yeperiod, only 11.2% of the growth in electronic clHIPAA.” [65FR50355]

HHS Safe and Sanitary 

Processing and Importing of Juice 

$151 million/yr. $44 million to $55 million 

in the first year and $23million/yr. thereafter. 

 “The quantified benefits (discounted annually ovat 7 percent) are expected to be about $2 billion and the quantified costs (discounted annually ovat 7 percent) are expected to be about $400 milli

HHS Standards for Privacy 

of IndividuallyIdentifiable HeathInformation 

Net present value savings of $19 billion

Net present value costs of$11.8 billion

The Rule shows a net savings of $29.9 billion ova net present value savings of $19 billion. This egrowth in “e-health” and “e-commerce” that may of uniform codes and standards. This final Privacproduce net costs of $18.0 billion, with net presebillion (2003 dollars) over ten years (2003-2012)some costs already having been incurred due to tTransactions Rule, which included an estimate ocare system of $29.9 billion over 10 years (2002 value of $19.1 billion. The Department expects tgenerated by all administrative simplification stanet savings to the health care system. [65FR8276
Table 9. Summary of Agency Estimates for Final Rules 4/1/00 - 9/30/01 

(As of date of completion of OMB review.)

AGENCY RULE BENEFITS COSTS OTHER INFORMATI

HHS Labeling of Shell

Eggs 

$261 million/yr. $56 million in the 

first year.$10 million/yr.thereafter. 

“Although there were no comments directly on thseveral comments argued that FDA used too high illnesses. In addition, some comments cited new the economic analysis in the proposal, FDA used SE risk assessment for one estimate of the baseliSalmonella surveillance data for another estimate [65FR76105]“The agency estimated the median benefits attribbe $261 million using the USDA SE risk assessmmillion using the CDC surveillance baseline.” [6

HHS/DOL/ Treasury 

Nondiscrimination in Health Coverage inthe Group Market

Not estimated A one time cost of $19

million the first year for affected businesses, plus$10.2 million annually for government enforcement 

“The premium and claims cost incurred by group coverage under HIPAA's statutory nondiscriminaindividuals previously denied coverage or offereon health factors are offset by the commensurate by the newly eligible participants on whose behaare paid.” [66FR1389] 

DOI Early-Season

Migratory BirdHunting Regulations 2000-2001 

$50 million to$192 million/yr. 

Not estimated The analysis was based on the 1996 National Hu

and the U.S. Department of Commerce's County which it was estimated that migratory bird hunte$429 million and $1,084 million at small busineslisted benefits represent estimated consumer surp

DOI Late Season

Migratory Game BirdHunting regulations 2000-2001 

$50 million to$192 million/yr. 

Not estimated The analysis was based on the 1996 National Hu

and the U.S. Department of Commerce's County which it was estimated that migratory bird hunte$429 million and $1,084 million at small busineslisted benefits represent estimated consumer surp

DOI Early-Season

Migratory BirdHunting Regulations 2001-2002 

$50million to$192 million/yr. 

Not estimated The analysis was based on the 1996 National Hu

and the U.S. Department of Commerce's County which it was estimated that migratory bird hunte$429 million and $1,084 million at small busineslisted benefits represent estimated consumer surp
Table 9. Summary of Agency Estimates for Final Rules 4/1/00 - 9/30/01 

(As of date of completion of OMB review.)

AGENCY RULE BENEFITS COSTS OTHER INFORMATI

DOI Late season Migratory 

Game Bird Hunting regulations 2001-2002

$50 million to$192 million/yr. 

Not estimated The analysis was based on the 1996 National Hu

and the U.S. Department of Commerce's County which it was estimated that migratory bird hunte$429 million and $1,084 million at small busineslisted benefits represent estimated consumer surp

DOI Mining Claims under 

the General MiningLaw; Surface Management

Not estimated Enforcement and 

administrative costs of $15.6 million annually ($1999); foregoneproduction between 0 and $133 million per year

“[T]hese values may overstate actual losses becaact to mitigate any production losses and because base of total U.S. gold production, not productiolands. Simply adjusting for production originatinreduce the value of forgone production by half.” 

DOJ Adjustment of Status

to That PersonAdmitted for Permanent Residence 

Not estimated $178 million in 2001, 

$99.2 million in 2002, and91.9 million in 2003. 

“This rule adds the new sunset date of April 30, qualifying petitions or applications that enable thadjust status using section 245(i) of the Act, clarsunset date on eligibility, and discusses motions 

DOL Ergonomics Program $9.1 billion/yr. 

(1996 dollars) 

$4.5 billion/yr. (1996 dollars)

“The cost analysis does not account for any chantime, or for possible adjustments in the demand achanges in production methods, investment effeceffects of the standard.” [65FR68773]

DOL Occupational Injury

and Illness Recordingand ReportingRequirements 

Not Estimated $38.6 million. Qualitative benefits of the rule include: (1) Enh

and employees to prevent injuries and illnesses, data to OSHA. 
Table 9. Summary of Agency Estimates for Final Rules 4/1/00 - 9/30/01 

(As of date of completion of OMB review.)

AGENCY RULE BENEFITS COSTS OTHER INFORMATI

DOL Safety Standards for

Steel Erection 

22 fatalities and1,142 injuries averted per year

$78.4 million/year OSHA estimates that, of the 35 annual steel erec

will be averted by full compliance with the existiadditional 22 fatalities will be averted by compliAdditionally, of the 2,279 lost-workday steel ereannually, OSHA estimates that 1,142 injuries wicompliance with the existing and final standards projects that full compliance with the final standcosts incurred to achieve compliance with the ex(or incremental) annualized costs of $78.4 millioestablishments. [66FR5251]

DOL Amendments to

Summary Plan Description Regulations 

Not estimated $47 million in 2001

$208 million in 2002$24 million/yr. thereafter 

“The regulation will ensure that participants havcomplete information about their benefit plans. Simportant to participants' ability to understand antheir plans at critical decision points, such as whmust decide whether to participate in a plan, or wwhich benefit package option might be most suitneeds.” “Improved information is expected to prfostering competition based on considerations beencouraging providers to enhance quality and redvalue-conscious consumers. Complete disclosure disadvantages that arise when, for example, incoinformation on different benefit option packages purposes. Information disclosure also promotes a

adherence to standards. Equally importantly, infthe SPD regulation, if combined with additional plan and provider performance, and with other hpromote efficient, competitive choices in the heaeven greater benefits.” [65FR70234] 

DOT Light Truck Average 

Fuel EconomyStandard, Model Year 2003

Not estimated Not estimated
Table 9. Summary of Agency Estimates for Final Rules 4/1/00 - 9/30/01 

(As of date of completion of OMB review.)

AGENCY RULE BENEFITS COSTS OTHER INFORMATI

DOT Advanced Airbags -233 to 215

fatalities and1,966 to 2,388 nonfatal injuries prevented and $.2 billion to $1.3 billion in reducedpropertydamage/yr. 

$400 million to $2billion/yr. 

Benefit estimates are undiscounted. 

ATBCB Electronic and

Information TechnologyAccessibility Standards 

Not estimated $177-1,068 million/yr. 

in $2000

The Federal proportion of the costs will range fromillion. 

EPA Identification of 

Dangerous Levels ofLead 

$45 billion to 176 billion (presentvalue over 50 years) 

$70 billion (present value over 50 years)

“The upper benefit estimate is obtained using the lower benefit estimate is obtained using the empEPA calculated present values using a 3 percent 

EPA Lead and Lead

Compounds:Lowering ofReporting Thresholds;Community Right-toKnow Toxic Chemical Release Reporting 

Not estimated $80 million in first year; 

$40 million in subsequentyears 

Benefits include more information about environlead compounds and promotion of pollution prev

EPA Revisions to the Water 

Quality Planning andManagementRegulation 

Not estimated $23 million/yr. ($2000) 

annualized over 10 yrs. 

EPA believes that these regulations will benefit henvironment by establishing clear goals for identwaterbodies and establishment of TMDLs and esclean-up. [65FR43586] 
Table 9. Summary of Agency Estimates for Final Rules 4/1/00 - 9/30/01 

(As of date of completion of OMB review.)

AGENCY RULE BENEFITS COSTS OTHER INFORMATI

EPA Arsenic and 

Clarifications toCompliance and New Source Contaminants Monitoring

$140-198million/yr. 

$206 million/yr. “EPA was not able to quantify many of the heal

associated with arsenic due to data limitations. Tother cancers such as skin and prostate cancer ansuch as cardiovascular, pulmonary, and neurologThe benefit estimates do not account for significreduced exposure and reduced incidence of disea

EPA Control of emissions

of air pollution from2004 and later model year highway heavyduty engines; revisionof light-duty truckdefinition. 

Reducedemissions of 2.5 million tons/year nitrogen oxides, 167,000 tons/year nonmethane hydrocarbons, 11160 tons/yearair toxics (benzene, formaldehyde, acetaldehyde, 1,3-butadiene). 

$479 million/yr. 

EPA Heavy-Duty Engine

and Vehicle Standards 

$70.4 billion in2030 (1999$)

$4.3 billion in 2030(1999$)

Benefit and cost estimates are annualized to the y

EPA National Emission

Standards for Hazardous Air Pollutants for Chemical Recovery Combustion Sources 

$280 million to$370 million/yr. ($1999)

$240 million in capital costs and then $30 million annually ($1999)

“Implementation is expected to reduce emissions and SO2, while it is expected to slightly increase pollutants can potentially cause adverse health efeffects, such as impaired visibility and reduced canalysis, we have not conducted detailed air quathe magnitude and extent of the potential impactpaper facilities. Nevertheless, to the extent that efacilities cause adverse effects, this final rule woimpacts”.[66FR3189])
Transfer Regulations

Of the 87 economically significant rules, Table 10 lists those that implement Federal 

budgetary programs. The budget outlays associated with these rules are “transfers” to program 

beneficiaries. Of the transfer rules, 16 are USDA rules in which 10 are crop assistance and 

disaster aids for farmers and 6 are food stamp program rules. HHS promulgated 17 rules 

implementing Medicare and Medicaid policy. The Social Security Administration and Federal 

Emergency Management Agency each promulgated three rules. DOL promulgated four rules 

including two on compensation programs on occupational illness and paid leave for birth and 

adoption. DOT, SBA and FAR each finalized two rules, one of which promotes safety incentive 

grants for seatbelt use. DOD, the Office of Federal Housing Enterprise Oversight, Veterans 

Administration, and the Office of Personnel Management each finalized one rule. 

Table 10. Agency Transfer Rules: 4/1/00 to 9/30/01 

(As of date of completion of OMB review.) 

Dept. of Agriculture (USDA) 

Agricultural Disaster and Market Assistance 

2000 Crop Agricultural Disaster and Market Assistance 

Market Assistance for Cottonseed, Tobacco, and Wool and Mohair

Bioenergy Program

Farm Storage Facility Loan Program

Wool, Mohair, and Apple Market Loss Assistance Programs 

Dairy, Honey, and Cranberry Market Loss Assistance and Sugar Programs 

Livestock Assistance, American Indian Livestock Feed, Pasture Recovery, and Dairy Price Support Programs 

2000 Crop Disaster Program 

Catastrophic Risk Protection Endorsement 

Food Stamp Program: Recipient Claim Establishment and Collection Standards

National School Lunch and School Breakfast Program: Additional menu Planning Approaches

Requirements for and Evaluation of WIC Program Bid Solicitations for Infant Formula Rebate Contracts

Non-Discretionary Provisions of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996

Non-Citizen Eligibility and Certification Provisions of Public Law 104-193

Food Stamp Program: Personal Responsibility Provisions of the Personal Responsibility and Work Opportunity 

Reconciliation Act of 1996 

Dept. of Defense 

Tricare: Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), NDAA for FY 2001 and 

Pharmacy Benefits Program

Dept. of Health and Human Services (HHS) 

Medicare Program: Medicare + Choice

Prospective Payment System for Home Health Agencies
Table 10. Agency Transfer Rules: 4/1/00 to 9/30/01 

(As of date of completion of OMB review.)

Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities 

Medicare Program: Hospital Inpatient Payments and Rates and Costs for Graduate Medical Education (1999)

Medicare Program: Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2001 Rates 

Medicare Program: Revisions to Payment Policies Under the Physician Fee Schedule for Calendar Year 2001

Medicare Program: Expanded Coverage for Outpatient Diabetes 

Prospective Payment System for Hospital Outpatient Services 

Revision to Medicaid Upper Payment Limit Requirements for Inpatient Hospital Services

Medicaid Program: Medicaid Managed Care

Medicaid Program: Change in Application of Federal Financial Participation Limits 

Medicare Program: Inpatient Payments and Rates and Costs for Graduate Medical Education (2000)

Medicare Program: Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities - Update 

Medicare Program: Prospective Payment System for Inpatient Rehabilitation Hospital Services

Medicare Program: Changes to the Hospital Inpatient Prospective Payment Systems and Rates and Costs of

Graduate Medical Education for Fiscal Year 2002

Modification of the Medicaid Upper Payment Limit Transition Period for Hospitals, Nursing Facilities, and Clinic 

Services

State Child Health; Implementing Regulations for the State Children’s Health Insurance Programs 

Social Security Administration 

Supplemental Security Income: Determining Disability for a Child Under Age 18

Revised Medical Criteria for Determination of Disability, Musculoskeletal System and Related Criteria

Collection of the Title XVI Cross-Program Recovery 

The Office of Federal Housing Enterprise Oversight 

Risk-based Capital

Department of Labor 

Government Contractors, Affirmative Action Requirements 

Claims for Compensation Under the Energy Employees Occupational Illness Compensation Program Act

Procedures for Predetermination of Wage Rates; Labor Standards Provisions Applicable to Contracts Covering

Federally Financed and Assisted Construction and to Certain Nonconstruction Contracts (“Helpers”) 

Birth and Adoption Unemployment Compensation

Dept. of Transportation

Safety Incentive Grants for the Use of Seatbelts

Amendment of Regulations Governing Railroad Rehabilitation and Improvement Financing Program

Veterans Administration 

Disease Associated with Exposure to Certain Herbicide Agents: Type 2 diabetes

59
Table 10. Agency Transfer Rules: 4/1/00 to 9/30/01 

(As of date of completion of OMB review.)

Federal Emergency Management Administration 

Supplemental Property Acquisition and Elevation Assistance

Disaster Assistance: Cerro Grande Fire Assistance

Supplemental Property Acquisition and Elevation Assistance

Small Business Administration 

Small Business Size Standards: General Building Contractors, etc.

New Market Venture Capital Program

Office of Personnel Management 

Health Insurance Premium Conversion

Federal Acquisition Regulation (FAR) 

Electronic Commerce in Federal Procurement: FAR case 1997-304 

Electronic Commerce and Information Technology Accessibility: FAR case 1999-607

Securities and Exchange Commission (SEC) 

Disclosure of Mutual Fund After-Tax Returns

Privacy of Consumer Financial Information (Regulation S-P)

Selective Disclosure and Insider Trading

Unlisted Trading Privileges

Disclosure of Order Execution and Routing Practices

Revision of the Commission’s Auditor Independence Requirements

Federal Trade Commission (FTC) 

Privacy of Consumer Financial Information

Federal Communications Commission (FCC) 

Promotion of Competitive Networks in Local Telecommunications Markets

Competitive Bidding Procedures

Installment Payment Financing for Personal Communications Services (PCS) Licensees 

Assessment and Collection of Regulatory Fees for Fiscal Year 2000 

Narrowband Personal Communications Services; Competitive Bidding

24 GHz. Service; Licensing and Operation 

Extending Wireless Telecommunications Services to Tribal Lands

Assessment and Collection of Regulatory Fees for Fiscal Year 2001

Nuclear Regulatory Commission 

Revision of Fee Schedules; 100% Fee Recovery

60
Table 10. Agency Transfer Rules: 4/1/00 to 9/30/01 

(As of date of completion of OMB review.)

Emergency Core Cooling System Evaluation Models

Revision of Fee Schedules; Fee Recovery for FY 2001

Federal Reserve System 

Privacy of Consumer Financial Information 

Major Rules for Independent Agencies 

The congressional review provisions of the Small Business Regulatory Enforcement 

Fairness Act (SBREFA) require the General Accounting Office (GAO) to submit reports on 

major rules to the committees of jurisdiction, including rules issued by agencies not subject to 

Executive Order 12866 (the “independent” agencies). We reviewed the information on the costs 

and benefits of major rules contained in GAO reports for the period of April 1, 2000 to 

September 30, 2001. GAO reported that five independent agencies issued nineteen major rules 

during this period. Two agencies did not conduct benefit-cost analyses. Three agencies 

considered benefits and costs of the rules. OIRA lists the agencies and the type of information 

provided by them (as summarized by GAO) in Table 11. Securities and Exchange Commission 

and Federal Trade Commission consistently considered benefits and costs in their rulemaking 

processes while Federal Communications Commission did not prepare benefit-cost analyses. 

In comparison to the agencies that are subject to E.O. 12866, the independent agencies 

provided relatively little quantitative information on the costs and benefits of the major rules. As 

Table 11 indicates, eight of the 19 rules included some discussion of benefits and costs. Six of 

the 19 regulations had monetized cost information; three regulations monetized benefits. 

However, it is difficult to discern whether the rigor and the extent of the analyses conducted by 

the independent agencies are similar to those agencies subject to the Executive Order.

61

Table 11. Rules for Independent Agencies (April, 2000 - September, 2001)

Agency Rule

Information on 

Costs or Benefits

Monetized 

Costs 

Monetized 

Benefits 

FCC Narrowband personal

communications services No No No

FCC Assessment and collection of

regulatory fees for fiscal year 

2000

No No No

FCC Extending wireless

telecommunications services to 

tribal lands 

No No No

FCC Installment payment financing 

for personal communications 

services (PCS) licensees 

No No No

FCC Competitive bidding procedures No No No 
Table 11. Rules for Independent Agencies (April, 2000 - September, 2001)

Agency Rule

Information on 

Costs or Benefits

Monetized 

Costs 

Monetized 

Benefits 

FCC 24 GHz Service; Licensing and 

operation 

No No No

FCC Promotion of competitive 

networks in local

telecommunications markets 

No No No

FCC Assessment and collection of

regulatory fees for fiscal year 

2001

No No No

Federal 

Reserve 

Privacy of consumer financial

information

No No No

FTC Privacy of consumer financial

information

Yes No No

NRC Emergency core cooling system

evaluation models

Yes Yes Yes

NRC Revision of fee schedules; 100% 

fee recovery, FY 2000 No No No

NRC Revision of fee schedules; Fee

recovery for FY 2001 No No No

SEC Privacy of consumer financial

information

Yes Yes No

SEC Selective disclosure and insider 

trading Yes Yes No

SEC Unlisted trading privileges Yes No No

SEC Disclosure of order execution

and routing practices Yes Yes Yes

SEC Revision of the Commission’s

auditor independence 

requirements 

Yes Yes Yes

SEC Disclosure of mutual fund aftertax returns 

Yes Yes No

Response to Public Comments 

One commenter (105) suggested that OIRA meet with international counterparts to 

develop a common reporting framework for costs and benefits that could be used internationally. 

OIRA believes that OECD might be an appropriate sponsor of this kind of activity. 

The Federal Communications Commission (98) stated that, although it was not subject to 

E.O. 12866 and reported to GAO that the requirement to propose a formal cost-benefit analysis 

“is not applicable” to the FCC, it did use cost-benefit analysis in its decision making in the FCC 

rules mentioned. 

62
63

The Nuclear Regulatory Commission (95) also stated that the draft report gave a 

misleading impression of its use of cost-benefit analysis in its regulatory decision making. The 

NRC stated that it “routinely” prepares detailed, quantitative, monetized information concerning 

the costs and benefits of its regulatory actions, including its rulemaking actions not classified by 

OMB as “major rules.” 

OIRA admits that a simple analysis of the GAO reports required by SBREFA may not 

present the full picture of agency use of cost-benefit analysis. 
64

CHAPTER III. REGULATORY GOVERNANCE ABROAD 

As a special feature, this year=s Annual Report to Congress on the Costs and Benefits of 

Regulation includes information on regulatory governance developments in other developed 

countries. The information is drawn from reports from the Organization for Economic Cooperation and Development (OECD), Asian Pacific Economic Cooperation, (APEC) and the 

European Commission (EC) and supplemented by insights drawn from OIRA discussions with 

OECD, APEC, and EC officials. 

A. OECD Activities

The OECD consists of 30 democracies with advanced market economies in Western 

Europe, North America, Australia, New Zealand, Japan, and Korea. As an integral part of its 

mission, OECD=s Public Management program (PUMA) assists governments with the “tools” 

and “rules” of good governance to build and strengthen effective, efficient and transparent 

government structures. 

The OECD countries have developed, through OECD=s PUMA activities, a systematic 

approach to evaluating the quality of national regulatory management programs. In its 1997 

report, OECD reported that the number of countries with such programs has grown from three or 

four in 1980 to almost all 30 OECD countries today. The international public debate about 

regulatory improvement has been transformed from a discussion about whether regulatory 

reform programs should be adopted to a debate about what specific measures should be 

implemented to improve regulatory performance. 

In 1995, the OECD published the first internationally accepted set of principles on 

ensuring regulatory quality: the Recommendation of the Council of the OECD on Improving the 

Quality of Government Regulation. We have reproduced these principles in Box 1. OECD 

reports that experience in member countries reveals that an effective regulatory management 

system requires three basic components: a regulatory policy adopted at the highest political 

level; explicit and measurable standards for regulatory quality; and a continuing regulatory 

management capacity. Countries vary in how well they provide these components, which OECD 

considers as mutually reinforcing in their impact on the quality of regulatory governance. 
65

Box 1. The OECD Reference Checklist for Regulatory Decision-Making 

1. Is the problem correctly defined?

The problem to be solved should be precisely stated, giving evidence of its nature and magnitude, and explaining why it has arisen 

(identifying the incentives of affected entities). 

2. Is government action justified?

Government intervention should be based on explicit evidence that government action is justified, given the nature of the problem, the 

likely benefits and costs of actions (based on a realistic assessment of government effectiveness), and alternative mechanisms for 

addressing the problem. 

3. Is regulation the best form of government action?

Regulators should carry out, early in the regulatory process, an informed comparison of a variety of regulatory and non-regulatory 

policy instruments, considering relevant issues such as costs, benefits, distributional effects and administrative requirements. 

4. Is there a legal basis for regulation?

Regulatory processes should be structured so that all regulatory decisions rigorously respect the "rule of law"; that is responsibility 

should be explicit for ensuring that all regulations are authorized by higher level regulations and consistent with treaty obligations, and 

comply with relevant legal principles such as certainty, proportionality and applicable procedural requirements. 

5. What is the appropriate level (or levels) of government for this action?

Regulators should choose the most appropriate level of government to take action, or if multiple levels are involved, should design 

effective systems of co-ordination between levels of government. 

6. Do the benefits of regulation justify the costs?

Regulators should estimate the total expected costs and benefits of each regulatory proposal and of feasible alternatives, and should 

make the estimates available in accessible format to decision-makers. The costs of government action should be justified by its 

benefits before action is taken. 

7. Is the distribution of effects across society transparent?

To the extent that distributive and equity values are affected by government intervention, regulators should make transparent the 

distribution of regulatory costs and benefits across social groups. 

8. Is the regulation clear, consistent, comprehensible and accessible to users?

Regulators should assess whether rules will be understood by likely users, and to that end should take steps to ensure that the text and 

structure of rules are as clear as possible. 

9. Have all interested parties had the opportunity to present their views?

Regulations should be developed in an open and transparent fashion, with appropriate procedures for effective and timely input from 

interested parties such as affected businesses and trade unions, other interested groups, or other levels of government. 

10. How will compliance be achieved? 

Regulations should assess the incentives and institutions through which the regulation will take effect, and should design responsive 

implementation strategies that make the best use of them. 
66 

 In light of these OECD principles, the Secretariat of the OECD has been sponsoring, 

since 1998, detailed reviews of the regulatory governance programs in member countries. 

Sixteen country reviews have been completed from 1998 to 2001 and several more are now 

underway. OECD also commissioned a regulatory survey of member countries in 2000, 

convened a meeting of senior risk management officials from governments in October 2001, and 

sponsored an international meeting in December 2001. 

Taken as a whole, the country-specific reviews, the 2000 OECD survey and recent 

international meetings reveal that the most common feature of regulatory management programs 

is that affected parties be consulted prior to regulation. A requirement for regulatory impact 

analysis prior to regulation has also been adopted in a majority of OECD countries. About half 

have some general requirement that regulatory alternatives be considered. Formal evaluation 

requirements for existing rules are less widespread. Some countries (e.g., Japan and Korea) have 

focused on the need to reduce overregulation while in other countries (e.g., the United States) the 

recent focus has been on improving regulatory quality through better analysis of benefits, costs 

and alternatives. 

B. APEC Activities

The Asia-Pacific Economic forum was established by President George H.W. Bush in 

1989. It is the primary international organization for promoting open trade and international 

cooperation among the 21 Pacific Rim countries. In addition to the seven OECD Pacific Rim 

countries, APEC includes Russia, China, Hong Kong, Chinese Taipei, Singapore, and Chile, 

among others. The APEC economies account for almost 50 percent of world trade. APEC is 

promoting increased transparency, openness and predictability based on the rule of law for both 

trade and regulation. It seeks to eliminate impediments to trade and investment by encouraging 

member economies to reduce barriers and adopt transparent, market-oriented policies, and 

addresses such issues as outdated telecommunications regulatory practices. APEC requires its 

member countries to post on its website individual action plans (IAPs) that set out how they plan 

to meet the APEC goals and to update them each year. One of the IAPs is a deregulation 

initiative based on the USG=s and other countries= experiences. The main focus of the 

deregulation initiative is to promote information sharing and dialogue, and increase the 

transparency of existing regulatory regimes and regulatory reform processes. OIRA has been 

helping USTR and the State Department promote this effort by highlighting our open, 

transparent, and analytically based regulatory development and oversight program. 

C. EC Activities

The European Union has been criticized on the grounds that its approach to governance is 

too disconnected from the concerns of ordinary residents of the member states. To address these 

concerns, the European Commission prepared in early 2001 a white paper entitled "European 

Governance," which describes major areas of concern and promising directions for reform of 

governance in the EU. Public consultation on the contents of the white paper is scheduled to 
67 

extend until March 2002, with conclusions drawn by the EC prior to the next Intergovernmental 

Conference, where European governance will be debated. 

The white paper addressed broad concerns about good governance and the need for 

increased openness, participation, accountability, effectiveness and coherence. These five 

principles are designed to reinforce the overriding principles of proportionality and subsidiarity. 

Before launching an initiative, applying these principles means checking systematically to 

determine: (a) if public action is really necessary; (b) if the European level is the most 

appropriate one; and (c) if the measures chosen are proportionate to the objectives. 

Concern about regulatory policy—both the EC=s and the member states roles—is featured 

in the white paper. As the executive arm of the European Union, the EC was granted the 

exclusive power to propose or initiate legislation and policy for Europe. The European 

Parliament (elected representatives of the people) and the European Council (comprised of 

representative ministers from member states) can modify EC proposals but do not have the 

power to initiate proposals. The EC has the initiating role in both “regulations,” which become 

law throughout Europe after Council and Parliament approval, and “directives,” which must be 

“transposed” (i.e., tailored and implemented) by the Member States before they are legally 

enforceable. 

The white paper calls for attention to “improving the quality, effectiveness and simplicity 

of regulatory acts”. The mechanisms cited include formal regulatory analysis, consideration of 

various policy instruments, choice of the right type of instrument, consideration of "coregulation@ involving cooperation among regulated entities, more cooperation among member 

states on practices and targets, evaluation and feedback once rules are established, discouraging 

overly complicated proposals, and faster legislative processes. The white paper, recognizing the 

extent of existing regulation but the absence of credible regulatory agencies in some areas, calls 

for both a comprehensive program of simplification of existing regulations as well as the creation 

of some new independent regulatory agencies (e.g., in airline and food safety where public 

confidence in Europe is low). The white paper also notes that a stronger regulatory system in 

Europe will allow the EU to be a more effective advocate of regulatory management in 

international settings. 

Soon after the Commission adopted the white paper in July 2001, a more specific 

“communication” was issued by the EC on “Simplifying and Improving the Regulatory 

Environment.” This document calls for at least a 25 percent reduction in the overall volume of 

European regulation (measured as the number of printed pages of laws) and the withdrawal of 

100 or so pending yet outmoded proposals from before 1999. With regard to new actions, the 

communication calls for enhancement of consultation, especially on-line consultation, and 

impact analysis. The latter, defined as “pre-assessments” of draft proposals to determine which 

proposals merit detailed impact analysis, including assessments covering economic, social and 

environmental consequences. 
68 

A far more detailed report on “better regulation” was prepared by an authoritative group 

chaired by the distinguished Frenchman Dieudonne Mandelkern, known as the Mandelkern 

Report. As published in November 2001, this report emphasized the economic significance of 

regulatory policy, suggesting that regulatory expenditures comprise perhaps 2 percent to 5 

percent of the European gross domestic product. The report rejects unthinking deregulation but 

recognizes that better regulation is necessary to enhance public confidence in government and 

assure that the public-welfare benefits of regulatory policy are attained in the future. 

The Mandelkern Report provides a detailed action plan on the themes of impact 

assessment, consultation, simplification, institutional structures to promote better regulation, 

alternatives to regulation, public access to the texts of regulations and “transposition” (or the 

tailoring and implementation of EC directives by the member states of Europe). Annex A of the 

Mandelkern Report draws from the recent OECD regulatory work to define the crucial steps in 

achieving better regulation. 

Late in 2001 the Economic and Social Committee of the European Parliament issued an 

“Opinion” on regulatory simplification by a vote of 62 votes in favor, 5 votes against and 5 

abstentions. The Committee concluded as follows: 

• The over-regulation of business is primarily a national problem but it also has a European 

dimension that needs to be addressed. 

• There is a manifest need for a fundamental overhaul of the regulatory framework within 

the European Union, accompanied by a streamlining and simplification of the existing 

body of legislation. 

• This regulatory review must focus not just on the future but also on the existing body of 

legislation and must be oriented not only towards simplification and improved methods 

but towards quantitative reductions. 

• The regulatory environment should establish a level playing field for businesses 

operating throughout Europe, which means a reduction in the variability in the 

requirements on businesses established by the member states. 

• A regulatory review body should be set up to review existing legislation and set out the 

guidelines for introducing new legislation. It should also conduct ex-post evaluations of 

the effects of legislation. This body should comprise representatives of the Commission, 

the national agencies and the business community. 

The stage is obviously set for a vigorous public debate about which steps should actually 

be taken to accomplish better regulation throughout the European Union. It is too early to assess 

what actions will be taken, but the next steps taken by the European Commission may be critical 

in determining whether meaningful regulatory improvements will occur. Even if the EC does 
69 

take concrete steps, supportive steps will also be required by the other EU institutions as well as 

the member states. 

Response to Public Comments 

Several commenters welcomed this new chapter to the report (73, 105, 106). One 

commenter emphasized the usefulness of identifying best practices among international 

regulatory authorities and cited the OECD checklist as a good example. Another thought that the 

chapter was a good first step in international understanding and that next step should be 

coordination in reporting results of regulatory policy in a consistent framework on an 

international scale (105). A third commenter suggested that U.S. support for better European 

regulation could produce major gains (106). This commenter urged more communication 

between the United States and the rest of the world about U.S. regulatory practices in order to 

counteract the belief by some that the U.S. economy is an unregulated “jungle economy.” The 

commenter suggested that the true picture is more complicated than that with the United States 

being both underregulated and overregulated at the same time. 

One commenter criticized the chapter for not emphasizing the importance of 

environmental protection and the precautionary principle in particular (99). The commenter 

suggested that we reference Environmental Issue Report No. 22 (2001) “Late Lessons from Early 

Warnings: The Precautionary Principle 1896-2000.” 
70 

CHAPTER IV. RECOMMENDATIONS FOR REFORM 

The Regulatory Right-to-Know Act requires OMB to publish “recommendations for 

reform.” In response to this requirement, OMB considered ways to involve the public in 

identifying candidates for reform. Accordingly, OMB sought public comment in its March 2002 

draft report on two reform initiatives. First, we solicited public comments on specific rules or 

regulatory programs in need of reform. As part of this first initiative, OMB specifically invited 

comments on regulatory and paperwork burdens imposed on small businesses. Second, we 

invited a review of agency practice regarding guidance documents, a first-time endeavor by 

OMB. 

In response to our request for regulatory reform proposals, we received suggestions on 

316 unique regulations and guidance documents covering 26 Federal agencies. This number of 

nominations is over four times larger than the 71 nominations received in 2001 and covers a 

broader range of topics. 

Last year, we used an OIRA-initiated process for selecting potential reforms in which we 

identified 23 of the 71 public nominations as “high priority review” candidates. As described in 

greater detail later in this chapter, this year we have decided to evaluate the nominations through 

an agency-initiated process. 

We have instituted this change for two reasons. First, the large volume of nominations 

(316 this year compared to 71 last year) strains OIRA’s ability to develop an informed list of 

priority nominations for consideration by agencies. Second, OIRA expects that agencies will 

perform the evaluation of the nominations bringing to bear on the candidates their extensive 

knowledge and resources, which will provide a basis for selecting reform priorities in 

consultation with OIRA. While the agencies are the final decisionmakers as to which reforms 

are undertaken, OIRA will share its views on reform opportunities during the inter-agency 

consultation process. 

Since this is OIRA’s second experience with a public-comment process on regulatory 

reform, much can be learned for the future about how the process can be improved. OIRA 

intends to compare the experience this year to last year when it decides in the future how to 

stimulate reforms of specific rules, paperwork requirements, and guidance documents. 

A. Review of Regulations, Paperwork, and Regulatory Programs 

In the March 2002 draft report, OMB called for public nominations of reforms that, if 

adopted, would increase overall net benefits to the public, considering both qualitative and 

quantitative factors. In doing so, OMB acknowledged that, while broad reviews of existing 

regulations have been required since 1981 under Executive Orders 12291, 12498, and 12866, 

they have met with limited success. Clearly, achieving broad agency review of existing rules is 

much easier said than done. In the first annual report on Executive Order 12866 released in 

November 1994, OIRA Administrator Sally Katzen noted that bureaucratic incentives make such 
71 

 

review a difficult undertaking. While the “lookback” process had begun under E.O. 12866, she 

said, “it had proven more difficult to institute than we had anticipated....[A]gencies are focused 

on meeting obligations for new rules, often under statutory or court deadlines, at a time when 

staff and budgets are being reduced; under these circumstances, it is hard to muster resources for 

the generally thankless task of rethinking and rewriting current regulatory programs” (p. 36). 

Past efforts at broad reviews of existing regulations, including reviews under Executive Order 

12866 and the National Performance Review, were largely unsuccessful.43 Beyond bureaucratic 

disincentives, resource constraints, and the complexity of the task, reviewing old rules may be 

hampered by unfounded fears that any attempt to modernize old rules is a veiled attempt to 

“rollback” needed safeguards. The difficulties and concerns surrounding this task do not mean it 

should be abandoned; they do counsel that an across-the-board review of all existing rules could 

be a poor use of OMB and agency resources, and that any review of old rules should be done 

carefully and openly. 

Accordingly, OMB established a modest process to review and improve agency rules. In 

selecting which rules or regulatory programs to propose for review, OMB directed commenters 

to consider the extent to which (1) the rule or program could be revised to be more efficient or 

effective; (2) the agency has discretion under the statute authorizing the rule to modify the rule or 

program; and (3) the rule or program is important. OMB indicated that recommended reforms 

might include extending or expanding regulatory programs; simplifying or modifying existing 

rules; or rescinding outmoded or unnecessary rules. 

OMB sought to ensure that this public comment process reflected the Administration’s 

goal of ensuring that agencies be particularly sensitive to the burden of their rules on small 

business. The Regulatory Right-to-Know Act directs that analysis of the impacts of Federal 

rules should give special consideration to small business impacts. As Congress stated in the 

findings for the Small Business Regulatory Enforcement Fairness Act of 1996, “small businesses 

bear a disproportionate share of regulatory costs and burdens.” A recent empirical study 

sponsored by the Small Business Administration Office of Advocacy supports this finding. The 

study shows that the average regulatory costs per employee were about 60 percent higher for 

small businesses than for large businesses: the average regulatory cost was about $7,000 per 

employee for firms with less than 20 employees compared to about $4,500 for firms with over 

500 employees.44 This is a significant finding, since small firms accounted for about threequarters of the employment growth and 90 percent of the new business growth in the 1990s.45 

Small business ownership is a critical vehicle for all Americans—and increasingly for women 

and minorities—to achieve greater economic opportunity.46 

43 See, e.g., General Accounting Office, Regulatory Reform: Agencies’ Efforts to Eliminate and Revise Rules Yield 

Mixed Results (Oct. 1997); Statement of L. Nye Stevens, Director, Federal Management and Workforce Issues, 

General Government Division, General Accounting Office, before the Senate Committee on Governmental 

Affairs, February 24, 1998. 44 See W. Mark Crain & Thomas D. Hopkins, ‘‘The Impact of Regulatory Costs for Small Firms,’’ a report for the 

U.S. Small Business Administration, Office of Advocacy, RFP No. SBAHQ–00–R–0027 (2001). 45 Small Business Economic Indicators 2000 (SBA, Office of Advocacy 2001). 46 The number of women-owned businesses increased by 16 percent between 1992 and 1997.
72 

 

OMB therefore specifically requested comments on needed reforms of regulations 

unnecessarily impacting small businesses and identification of specific regulations and 

paperwork requirements that impose especially large burdens on small businesses and other 

small entities without an adequate benefit justification. OMB also requested comments from the 

small business community on problematic guidance documents discussed in the following 

section. OIRA is coordinating with the Office of Advocacy of the Small Business 

Administration on this initiative. 

B. Review of Problematic Agency Guidance 

As the scope and complexity of regulation and the problems it addresses have grown, so 

too has the need for government agencies to inform the public and provide direction to their 

staffs. To meet these challenges, agencies have relied increasingly on issuing guidance 

documents. In recognition of this trend, OIRA decided to add a new feature of this report: a 

specific request for public comments on problematic agency guidance documents. 

The use of guidance documents is widespread, and often for good reasons. Agencies may 

properly provide guidance to interpret existing law through an interpretative rule, or to clarify 

how the agency will treat or enforce a governing legal norm through a policy statement. In some 

cases, Congress has directly expressed the need for guidance, such as the small business 

compliance guides mandated by Section 212 of the Small Business Regulatory Enforcement 

Fairness Act.47 Guidance documents, used properly, can channel the discretion of agency 

employees, increase efficiency by simplifying and expediting agency enforcement efforts, and 

enhance fairness by providing the public clear notice of the line between permissible and 

impermissible conduct while ensuring equal treatment of similarly situated parties. 

Experience has shown, however, that guidance documents also may be used improperly. 

Problematic guidance documents have received increasing scrutiny by the courts, the Congress 

and scholars.48 While acknowledging the enormous value of agency guidance in general, OMB 

sought public comment on problematic agency guidance documents. 

To promulgate regulations, an agency must ordinarily comply with the notice-andcomment procedures specified in the Administrative Procedure Act (APA), 5 U.S.C. 553. 

47 5 U.S.C. 601 note, Title II of Pub. L. 104–121, Mar. 29, 1996. 

48 E.g., United States v. Mead, 533 U.S. 218 (2001); Appalachian Power Company v. Environmental Protection 

Agency, 208 F.3d 1015 (D.C. Cir. 2000); ‘‘Non-Binding Legal Effect of Agency Guidance Documents,’’ H. Rep. 

106–1009 (106th Cong., 2d Sess. 2000); H.R. 3521, the ‘‘Congressional Accountability for Regulatory Information 

Act of 2000,’’ Section 4; Robert A. Anthony ‘‘Interpretative Rules, Policy Statements, Guidances, Manuals and the 

Like—Should Federal Agencies Use Them to Bind the Public?,’’ 41 Duke L.J. 1311 (1992); Richard J. Pierce, Jr., 

‘‘Seven Ways to Deossify Agency Rulemaking,’’ 47 Admin. L. Rev. 59 (1995); Peter L. Strauss, ‘‘Comment, the 

Rulemaking Continuum,’’ 41 Duke L.J. 1463 (1992); Administrative Conference of the United States, Rec. 92–2, 1 

CFR 305.92–2 (1992); Carnegie Commission, Risk and the Environment: Improving Regulatory Decisionmaking 

(1993).
73 

Section 553 requires that agencies must, in many cases, publish a notice of proposed rulemaking 

in the Federal Register. 5 U.S.C. 553(b). When notice is given, agencies also generally give 

interested persons an opportunity to comment on the proposal in writing. Agencies also may 

invite the public to present their views in person. 5 U.S.C. 553(c). Unless otherwise required by 

statute, notice and opportunity for comment are not required when an agency issues rules of 

agency organization, procedure, or practice; or where the agency finds for good cause that notice 

and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. 5 

U.S.C. 553(b)(A)–(B). 

Generally speaking, guidance (as opposed to regulations) is issued without notice and 

comment in order to clarify or explain an agency interpretation of a statute or regulation, or to 

clarify how the agency will treat or enforce a governing legal norm. These guidance documents 

may have many formats and names, including guidance documents, manuals, interpretive 

memoranda, staff instructions, policy statements, circulars, bulletins, and so on. 

Beyond being exempt from notice-and-comment procedures, guidance documents may 

not normally be subject to judicial review or the kind of careful OMB and interagency review 

required by Executive Order 12866, as amended. Finally, some guidance documents may not be 

subjected to the rigorous expert peer review conducted on some complex rulemakings. Because 

it is procedurally easier to issue guidance documents, there may be an incentive for regulators to 

issue guidance documents rather than conduct notice and comment rulemakings. As the D.C. 

Circuit recently observed in Appalachian Power: 

The phenomenon we see in this case is familiar. Congress passes a broadly 

worded statute. The agency follows with regulations containing broad language, 

open-ended phrases, ambiguous standards and the like. Then as years pass, the 

agency issues circulars or guidance or memoranda, explaining, interpreting, 

defining and often expanding the commands in regulations. One guidance 

document may yield another and then another and so on. Several words in a 

regulation may spawn hundreds of pages of text as the agency offers more and 

more detail regarding what its regulations demand of regulated entities. Law is 

made, without notice and comment, without public participation, and without 

publication in the Federal Register or the Code of Federal Regulations. 208 F.2d 

at 1019. 

Through guidance documents, agencies sometimes have issued or extended their “real 

rules,” i.e., interpretative rules and policy statements, quickly and inexpensively—particularly 

with the use of the Internet—and without following procedures prescribed under statutes or 

executive orders. 

The failure to comply with the APA’s notice-and-comment requirements or to observe 

other procedural review mechanisms can undermine the lawfulness, quality, fairness, and 

political accountability of agency policymaking. The misuse of agency guidance also can impose 
74 

significant costs on or limit the freedom of the public without affording an opportunity for public 

participation. 

Problematic guidance may take a variety of forms. An agency publication that is 

characterized as some kind of guidance document or policy statement may directly or indirectly 

seek to alter rights or impose obligations and costs not fairly discernible from the underlying 

statute or legislative rule that the document purports to interpret or implement. Such documents 

are occasionally treated by the agency as having legally binding effect on private parties. When 

that occurs, substantial questions can arise regarding the propriety of the guidance itself—

specifically whether it should be considered a regulation subject to APA procedures. Some 

guidance documents also may be founded on complex technical or scientific analyses or 

conclusions, which would be improved not only by public comment but also by expert, 

independent peer review. Finally, problematic guidance might be improved by interagency 

review. 

The benefits of these procedural safeguards are well established. Notice-and-comment 

procedures can benefit agency policymaking in several ways. Potentially affected parties may 

improve the quality of a rule by supplying helpful information or alerting the agency to 

unintended consequences of a proposal. Notice-and-comment procedures also increase fairness 

by allowing potentially affected parties to participate in the decisionmaking process, and enhance 

political accountability by providing the public and its elected representatives advance notice of 

its policy decisions and an opportunity to shape them. As the Supreme Court recently confirmed 

in the Mead decision, guidance will receive less deference by the courts than properly 

implemented agency rules. Legislative rulemaking may also increase efficiency by allowing an 

agency to resolve recurring issues of legislative fact once instead of addressing such issues 

repeatedly on a case-by-case basis. Moreover, independent and expert peer review of highly 

technical or scientific agency guidance can enhance its objectivity and reliability, leading to 

better-informed decisionmaking. Finally, interagency review can ensure that agency action is 

consistent with Administration policy and is beneficial from a broader, societal perspective. 

Under its obligation to promote recommendations for reforming the regulatory process 

and agency rules under the ‘‘Regulatory Right-to-Know Act’’ as well as its general duties to 

manage the efficiency and integrity of the regulatory process, OMB requested public comment 

on problematic Federal agency guidance. Specifically, OMB sought public comment on the 

nature and extent of problematic guidance documents in agency policymaking, the adverse 

impacts, the benefits of proper guidance documents, criteria to identify problematic guidance, 

current examples of problematic guidance documents, and suggestions on how problematic 

guidance can be curtailed without undermining the typically appropriate use of guidance by 

Federal agencies. 
75 

C. Responses to OMB’s Request for Regulatory Reforms 

Based on our prior experience with regulatory-reform processes, OIRA sought to 

improve this year’s process and increase the usefulness of public comments. In the March 2002 

draft report, for example, OIRA provided more specific direction to commenters, requesting that 

they use a standard format to summarize their nominations. OIRA also actively encouraged 

diverse segments of the public to provide comments in an effort to increase the number and 

breadth of nominations. Among the comments that OIRA received were responses to a speech 

made by President Bush on March 19, 2002, at the Women’s Entrepreneurship Summit, in which 

he asked participants to e-mail OMB suggestions to reduce unnecessary regulatory burdens on 

small businesses. 

 OMB received comments on 267 regulations and 49 guidance documents from 

approximately 1,700 individuals, firms, trade associations, non-profit organizations, academics, 

and government agencies.49 Two commenters (80 and 93) did not submit specific nominations, 

but did provide useful reports that OIRA staff were able to transform into specific nominations. 

As noted earlier, OMB received suggestions on only 71 regulations from 33 commenters last 

year. Of this year’s 267 regulatory nominations, 26 directly involved paperwork and 

recordkeeping requirements. 

 

The commenters who participated in this year’s initiatives represented a broad range of 

interests and perspectives. Approximately 26.5 percent of the commenters were individuals, 

26.5 percent were firms, 32.9 percent were trade associations, 9 percent were non-profit groups 

and academics, and 5.2 percent were government agencies. 

 The diversity of the commenters was reflected in the issues they raised and the types of 

solutions they proposed. For example, excluding the regulatory nominations concerning 

independent agencies, 52.8 percent of the regulatory nominations sought modifications to 

existing or proposed rules that would increase flexibility and 7.8 percent recommended 

rescissions of existing rules. Over a quarter of the nominations advocated extending regulation, 

either by making existing and proposed rules more stringent (17.4 percent) or by promulgating 

new regulations (11.5 percent). Other nominations did not fall into these four categories for 

several reasons: (1) no solution was proposed, (2) the nature of the proposed solution was not 

clear, or (3) they had more than one commenter recommending different types of solutions (see 

Chart 1). 

49Over a thousand of this year’s comments were submitted as part of a coordinated effort relating to the Department 

of Labor’s rules implementing the Family and Medical Leave Act. A similar campaign concerning the National 

Archives and Records Administration’s rules on the Disposition of Federal Records involved almost 500 

commenters. 
76 

Chart 1. Commenters’ Proposed Regulatory Solutions 

New Rulemaking

Modify Rule (Increase

Stringency)

Modify Rule (Increase

Flexibility)

Rescind Rule

Other

 

OIRA’s first step in processing the public nominations was to prepare summaries of each 

of the rules and guidance documents that were nominated by one or more commenters. The 

summaries were based largely on information provided by commenters using OMB’s suggested 

formats. Summaries of the nominations of rules and guidance documents can be found in a 

separate background document entitled “Stimulating Smarter Regulation: Summaries of Public 

Suggestions for Reform of Regulations and Guidance Documents,” which is available on OMB’s 

website at www.whitehouse.gov/omb/inforeg/regpol-reports_congress.html. These summaries 

provide identifying information about the regulations and guidance documents and describe what 

the existing regulations or guidance documents do (or what the new regulations or guidances 

would do). In addition, the summaries outline the commenters’ descriptions of harmful or 

beneficial impacts and their proposed solutions. The identity of each commenter is also

disclosed. 

OMB also requested that commenters provide an estimate of economic impacts, 

including quantified costs and benefits. If quantified estimates were not available, commenters 

could provide qualitative descriptions. OIRA did not supplement these estimates in the 

summaries, which indicate whether commenters provided this information. 

As noted above, consistent with a Presidential priority, the March 2002 draft report 

highlighted the regulatory burden imposed on small business. OIRA’s summaries therefore 

indicate whether or not a nominated rule or guidance document might unnecessarily impact 

small businesses and/or impose especially large burdens on small businesses without a justifiable 

benefit. In most cases this information was provided by commenters, although OIRA 

occasionally added relevant information. 
77 

D. Process for Evaluating Reform Nominations

 

During our preliminary review of the public comments—when we identified the 267

rules and 49 guidance documents nominated for reform by one or more commenters—we 

excluded from consideration comments that did not provide specific information on regulations 

or guidance documents. In our review of the 316 nominations, OIRA found that the rules and 

guidance documents fell into several categories. This review was based on information available 

to OIRA at the time we processed the public nominations. 

The first category includes 92 rules and 12 guidance documents that were under agency 

consideration or were recently the subject of agency consideration. This category also includes 

nominations designated by OIRA in last year’s report as “high priority review” candidates.50 

The second category includes 49 rules and two guidance documents that raised issues concerning 

independent agencies, which are outside the purview of OIRA’s regulatory-review 

responsibilities.51 The remaining 126 rules and 35 guidance documents make up a third category 

of nominations that OIRA is referring to agencies for their evaluation (see Table 12). 

 Table 12. Categorization of Public Nominations 

Category Rules

Guidance 

Documents Total 

Issues Under 

Review/Completed 92 12 104

Issues Concern 

Independent Agency

49 2 51

Issues Referred to

Agency for Evaluation 

126 35 161

Total 267 49 316

While OIRA is forwarding to the agencies all of the public nominations for their review, 

we are specifically requesting that the responsible agencies consider the nominations in the third 

category as potential candidates for reform. The regulations and guidance documents that we are 

referring to agencies for their evaluation are listed in Tables 13 and 14, respectively. It is 

OIRA’s intention that this agency review of nominations be a merit-based process in which the 

consideration of nominations is objective, consistent, and grounded in the regulatory principles 

codified in Executive Order 12866 and the statutory authority of the agencies. 

To help guide agency review of the public nominations, OIRA suggests that agencies rely 

on three criteria: efficiency, fairness, and practicality. These criteria are defined as follows: 

50Appendix C provides a status report for each of the 23 high-priority rules that OIRA suggested for reform in 2001. 51The following independent agencies are responsible for issues raised by public commenters: the Equal 

Employment Opportunity Commission, the Federal Communications Commission, the Federal Reserve Board, the 

Federal Trade Commission, and the Securities and Exchange Commission.
78 

• Efficiency. Agencies should give consideration to reforms that present an opportunity to 

increase regulatory efficiency by maximizing net benefits, including potential 

quantitative and qualitative improvements to the economy, environment, and public 

health and safety. 

• Fairness. In addition to assessing overall costs and benefits, agencies should take into 

consideration nominations with the potential to increase fairness through desirable 

distributive impacts and process considerations. 

• Practicality. Agencies should give greater weight to nominations that (1) they have 

discretion to implement under existing statutory authority (although potential reforms 

should not be eliminated simply because implementing them would require new statutory 

authority) and (2) are judged to be important relative to other regulations and programs 

under consideration for review. OIRA is sensitive to the practicalities (including agency 

resources) of pursing certain nominations at this time. 

OIRA understands that agency assessments of reform nominations will necessarily take 

into account budgetary considerations, statutory mandates, and other relevant factors. OIRA also 

does not expect agencies to necessarily agree with the analysis or solutions presented by 

commenters, even for those nominations they identify as reform candidates. 

Table 13. Nominations Referred to Agencies for Evaluation – Regulations 

Agency Regulation Ref. 

Number* 

Agriculture Child Nutrition Program 1 

Agriculture Animal Identification 3 

Agriculture Salmonella Performance Standards 6 

Agriculture National Organic Program 7 

Agriculture Badge as Identification of Inspectors 10 

Agriculture Phytosanitary Certificates for Seeds 12 

Agriculture Swine Production Contract Library 13 

Agriculture National Forests Land Use: Special Uses 14 

Agriculture Low Cost Timber Sales and Grazing Fees 16 

Education Title IX and Collegiate Sports Participation 18 

Energy Energy Conservation Standards for Clothes Washers 21 

HHS Special Treatment: Direct Graduate Medical Education Payments 23 

HHS Medicare Secondary Payer Provision 24 

HHS Physician Certification for Non-Emergency Ambulance Services 25 

HHS 75% Rule 26 

HHS Converted Bed Rule 27 

HHS Exemption Date Rule 28 
Table 13. Nominations Referred to Agencies for Evaluation – Regulations 

Agency Regulation

Ref. 

Number* 

HHS Medical Director Rule 29 

HHS Minimum Staffing Standards for Nursing Homes 30 

HHS One-Hour Restraint Rule 31

HHS Revisions to Medicare Payment Policies 32

HHS Certificates of Medical Necessity 33 

HHS Use of the OASIS for Home Health Agencies 35 

HHS Clinical Laboratory Improvement Act Rules 36 

HHS/FDA Standard of Chemical Quality – Arsenic 38

HHS/FDA Standard of Chemical Quality – Uranium 39

HHS/FDA Labeling Genetically Modified Foods 41 

HHS/FDA Hormones in the Food Supply 42 

HHS/FDA Antibiotics in Food Supply 43

HHS/FDA Food Identity Standards 44

HHS/FDA Medical Drug and Device Regulations 45 

HHS/FDA Labeling of Carmine 47

HHS/FDA Labeling of Sorbitol 48 

HHS/FDA Labeling of Caffeine Content 49 

HHS/FDA Labeling of Food Allergens 50 

HHS/FDA Investigational New Drug (IND) Regulations 51 

HUD Predatory Lending 55

HUD Insured Ten-Year Protection Plans 56 

Interior National Landscape Conservation System 62 

Justice Hemp Food Products 68 

Justice/INS Driver's Privacy Protection Act 70 

Justice/INS Electronic Storage of I-9 Forms 71 

Justice/INS Forms I-140 and I-485 73

Labor Medical Certification 77

Labor Computer Professional Exemption under FLSA 78 

Labor FLSA Administrative Exception 80 

Labor SCA/Wage Determination Process/Wage Surveys 82 

Labor SCA Wage Increases and Benefit Improvements 84 

Labor FLSA Medical Leave 85 

Labor Explosives 88

Labor/OSHA Explosives and Process Safety Management 90 

Labor/OSHA Hazard Communication 92

79 
Table 13. Nominations Referred to Agencies for Evaluation – Regulations 

Agency Regulation

Ref. 

Number* 

Labor/OSHA Lead in Construction 93 

Labor/OSHA Sling Standard 96

Labor/OSHA Process Safety Management/Highly Hazardous Chemicals 99 

Labor/OSHA Bloodborne Pathogens Standard 100

Labor/OSHA Metalworking Fluids 101

Labor/PWBA Claims Procedures 104

State Flight Simulators 105

DOT Disadvantaged Business Enterprise Program 106 

DOT/FAA General Definitions 107

DOT/FAA Design and Construction 108 

DOT/FAA Seats, Berths, Safety Belts, and Harnesses 110 

DOT/FAA Improved Flammability Standards for Thermal/Acoustic Material 112 

DOT/FHWA Contract Requirements for Minor Transportation Projects 113 

DOT/FHWA Historic Preservation Regulations 114 

DOT/FHWA Outdoor Advertising Control 115 

DOT/FHWA Highway Design 116 

DOT/FHWA Traffic Operations 117 

DOT/FHWA Highway Work Zone Safety 118 

DOT/FHWA Commercial Size and Weight 119 

DOT/FMCSA Inspection, Repair, and Maintenance 121 

DOT/FTA Buy America Pre-Award and Post Delivery Certification 125 

DOT/FTA Set-Aside for Intercity Bus 126 

DOT/MARAD Vessel Financing Assistance 127 

DOT/NHTSA Lower Interior Front Impact Protection 134 

DOT/NHTSA Passenger Vehicle Compatibility 135 

DOT/NHTSA Roof Crush 137 

DOT/NHTSA Passenger Vehicle Brakes 138 

DOT/NHTSA Door Locks 139 

DOT/NHTSA Glazing Materials and Crash Avoidance 142 

DOT/NHTSA Lamps, Reflective Devices, and Assoc. Equipment 143 

DOT/NHTSA Commercial Vehicle Operator Visibility 144 

DOT/NHTSA On-Board Crash Recorders 145 

DOT/NHTSA Driver Distractions 146 

DOT/NHTSA Pedestrian Crash Protection 147 

DOT/NHTSA Bumper Strength 148 

80 
Table 13. Nominations Referred to Agencies for Evaluation – Regulations 

Agency Regulation

Ref. 

Number* 

DOT/NHTSA Commercial Vehicle Brakes 149 

DOT/NHTSA Consumer Information 150 

DOT Commercial Vehicle Rollover 151 

DOT/NHTSA Side-Impact Protection 152 

DOT Emergency Response and Auto Crash Notification 154 

DOT Commercial Vehicle Design Compatibility 155 

DOT/RSPA Emergency Preparedness Grants 157 

DOT/RSPA Hazardous Materials Training 158 

Treasury Currency and Foreign Financial Accounts 159 

Treasury/IRS Employer Identification Numbers 161 

Treasury/IRS Flexible Spending Accounts 162 

Treasury/IRS Monthly Tax Deposits 166 

Treasury/IRS Mortgage Revenue Bond Purchase Price Limits 167 

Treasury/IRS Partnership Investments in Small Business Stock 168 

Treasury/IRS Business Use of Home 169 

EPA Regulatory Reform for Handling Refrigerants 170

EPA Chemical Plant Safety Standards 171 

EPA Protections for Farm Children from Pesticide Exposures 178

EPA Definition of Volatile Organic Compound 179

EPA Motor Vehicle Emission Standards for Greenhouse Gases 180 

EPA Withdrawal of State Delegations 184 

EPA TRI Alternate Reporting Threshold (Form A) 188 

EPA Collection of Health Screening Data 189

EPA Export Notification Requirements 190 

EPA PCB Spill Cleanup Policy 191

EPA Storage for Reuse 192 

EPA Spill Prevention Plans 194

EPA NPDES and Sewage Sludge Monitoring Reports 195 

EPA Stormwater Phase I 201 

EPA Stormwater Phase II 202 

EPA Removal Credits for POTWs 203 

EPA Drinking Water Standards for Radionuclides 207 

EPA TRI Form R Reporting 209 

EPA TRI: Lowering Reporting Thresholds for PBT Chemicals 210 

NARA Disposition of Federal Records 253 

81 
Table 13. Nominations Referred to Agencies for Evaluation – Regulations 

Agency Regulation

Ref. 

Number* 

OPM Federal Employees Health Benefits 254 

US Army Corps Nationwide Permits 265 

US Corps, EPA Definition of Fill Material 266

USPS Commercial Mail Receiving Agencies 267 

*Refers to numbers assigned to nominations in Section I of “Summaries of Public Suggestions for Reform of 

Regulations and Guidance Documents,” which is available at www.whitehouse.gov/omb/inforeg/regpolreports_congress.html. 

82 

Table 14. Nominations Referred to Agencies for Evaluation – Guidance Documents 

Agency Guidance Document Ref. 

Number* 

HHS Medicare Carrier Manual/Medicare Intermediary Manual 2 

HHS Signature on File Requirement for Ambulance Services 3 

HHS Payment to Health Care Delivery System 4

HHS Individual Health Insurance Rules 5 

HHS Guidance to Surveyors - Long Term Care 6

HHS Discrimination Against Persons with LEP 7 

HHS/FDA Nine-Compounds Monitoring 8

HHS/FDA Coverage of Personal Importations 9 

Interior Endangered Species Act Survey Protocols 10 

Justice Guidance on Federal Prison Industries 11 

Labor Coordination of FMLA with other Leave Policies 12

Labor/OSHA Multi-Employer Citation Policy 16

DOT/FAA General Operating and Flight Rules 17 

DOT/Coast Guard Marine Safety Manual 18 

Treasury/IRS Low-Income Housing Tax Credit 19 

Access Board ADA/ABA Guidelines 20 

EPA EPA Index of Applicability Decisions 21

EPA “Once In, Always In” Policy 23 

EPA Improving Air Quality Through Land Use Activities 24

EPA TRI Reporting Forms and Instructions 26 

EPA TRI Reporting Questions and Answers 27 

EPA Waterborne Diseases 28

EPA Food Quality Protection Act Policy Papers 29

EPA Integrated Risk Information System 30 
Table 14. Nominations Referred to Agencies for Evaluation – Guidance Documents 

Agency Guidance Document Ref. 

Number* 

EPA Investigating Title VI Administrative Complaints 31

EPA Economic Benefit of Noncompliance in Civil Penalty Cases 32 

EPA TRI Lead Reporting 33 

EPA Pesticide Registration Notices 34

EPA Site-Specific Risk Assessments in RCRA 35

EPA RCRA Spent Catalyst Policy 37

EPA Superfund Indirect Costs 38

EPA Ecoregional Nutrient Criteria Documents 39

EPA Submetering Water Systems 40 

OMB Cost Accounting Standards for Educational Institutions 47

SBA Guidance on Credit Unions 48 

*Refers to numbers assigned to nominations in Section II of “Summaries of Public Suggestions for Reform of 

Regulations and Guidance Documents,” which is available at www.whitehouse.gov/omb/inforeg/regpolreports_congress.html. 

The counts of rule nominations by agency generally reflect the relative size of the 

agencies’ regulatory programs. The 267 regulations that commenters nominated for reform are 

the responsibility of 24 regulating agencies. Five of these agencies—the Departments of Health 

and Human Services, Labor, and Transportation, EPA, and the Federal Communications 

Commission (FCC)—accounted for over two-thirds of the total nominated regulations. 

Commenters nominated for reform 49 guidance documents from 14 agencies. EPA accounted 

for almost half of these nominations (see Table 15). 

Table 15. Total Public Nominations by Agency

Agency Regulations

Guidance 

Documents Total 

Agriculture 16 1 17

Commerce 1 0 1

Education 3 0 3

Energy 2 0 2

HHS 32 8 40

HUD 2 0 2

Interior 11 1 12

Justice 7 1 8

83 
Table 15. Total Public Nominations by Agency

Agency Regulations

Guidance Total Documents 

DOL 30 5 35

State 1 0 1

DOT 53 2 55

Treasury 11 1 12

Access Board 0 1 1 

EEOC 3 1 4

EPA 43 22 65

FERC 1 0 1

Federal Reserve 8 0 8 

FCC 24 0 24

FTC 4 1 5

NARA 1 0 1

OMB 0 3 3

OPM 1 0 1

SBA 1 1 2

SEC 9 0 9

U.S. Army Corps 2 1 3 

U.S. Postal Service 1 0 1 

Total 267 49 316

E. Next Steps 

OIRA is requesting that agencies review all of the public nominations. The process of 

selecting candidates for reform will involve consultations between the agencies and OIRA. 

Specifically, OIRA is asking that agencies complete their initial review of the nominations for 

which they are responsible and discuss them with OIRA by February 28, 2003. Final decisions 

about which reforms to undertake will be made by the agencies. 

During these consultations, the 92 rules and 12 guidance documents that are under 

current or recent agency consideration will also be discussed. Where appropriate, OIRA may 

request agencies to provide brief status reports about their recent or ongoing activities 

concerning the issue(s) raised by the public commenter(s). The type of status report will depend

on the status of the issues raised. In some cases, the status report will indicate that no further 

action is needed. In cases where a final decision has not been made and agency activities are 

84 
85 

underway, OIRA is encouraging agencies to consider the public comment and, where 

appropriate, place it in the rulemaking docket. For the 49 rules and two guidance documents that 

raised issues concerning independent agencies, OIRA is requesting that these agencies evaluate 

these nominations, as well. 

Finally, OIRA is asking SBA’s Office of Advocacy to review all of the public 

nominations and identify for agencies those that it thinks offer the potential to reduce unjustified 

regulatory burdens on small businesses. OIRA is requesting that SBA consult with OIRA to 

develop a process for addressing these issues. 
86 

APPENDIX A. IMPACT OF THE CARD MEMORANDUM 

 

On January 20, 2001, the President's Chief of Staff issued a directive to agency heads to 

take steps to ensure that policy officials in the incoming Administration had the opportunity to 

review any new or pending regulations. This followed similar practices adopted at the beginning 

of previous administrations. The directive issued by Chief of Staff Andrew Card, and 

subsequent instructions from OMB Director Mitchell Daniels, allowed newly appointed political 

officials to ensure that regulations published and implemented after January 20, 2001 reflected 

the priorities and policies of the Bush administration. Given the deliberative (and often lengthy) 

nature of the rulemaking process, some of the regulations that were subject to the reviews and 

procedures required by the Card and OMB directives remain under active consideration by 

agencies. 

In last year=s annual Report to Congress, we provided a summary of actions taken by 

agencies pursuant to rules targeted for scrutiny by the Card memo, and by a subsequent OMB 

memorandum to agencies. These actions, subject to certain exceptions, included withdrawing 

unpublished regulations from the Federal Register and from review by OMB=s Office of 

Information and Regulatory Affairs, and delaying the effective date of final rules published in 

the Federal Register but not yet in effect. By the end of May 2001, agencies had conducted 

reviews and taken appropriate action on most of the regulations subject to the Card Memo and to 

subsequent OMB guidance. The final disposition of many of these rules, however, had not been 

decided. 

Agency heads were also instructed to review published final rules that had not yet 

become effective to decide which ones should be permitted to go into effect as scheduled and 

which ones should be delayed to allow for proper policy review. According to a January 2002 

General Accounting Office (GAO) report, there were a total of 371 published final rules 

potentially subject the Card Memorandum=s requirement that effective dates be delayed by 

agencies.52 GAO found that, as of January 20, 2002, agencies had allowed 281 of these 371 

rules to go into effect without delay. Agencies decided to delay the effective dates of the 

remaining 90 regulations. Table 16 provides an agency-by-agency status report on these rules. 

52General Accounting Office, “Delay of Effective Dates of Final Rules Subject to the Administration=s January 20, 

2001, Memorandum” (GAO-02-370R), p. 3.
87 

Table 16. Number of Regulations Delayed and Not Delayed

Department/Agency Delayed Not Delayed Total 

Agriculture 10 6 16 

Commerce 2 12 14 

Education 3 10 13 

Energy 8 6 14 

Health and Human Services 16 13 29 

Housing and Urban Development 4 1 5 

Interior 6 2 8 

Justice 4 4 8 

Labor 5 3 8 

Transportation 15 117 132 

Treasury 0 12 12 

Environmental Protection Agency 8 52 60 

Independents and Other 9 43 52 

 Total 90 281 371 

Source: General Accounting Office, “Delay of Effective Dates of Final Rules Subject to the Administration=s 

January 20, 2001, Memorandum” (GAO-02-370R).

GAO=s review of the 90 rules delayed by agencies pursuant to the Card Memorandum 

determined that 75 went into effect after one or more delays. Table 17 provides descriptions of 

the 15 regulations that remained delayed as of January 20, 2002, their current status, and (where 

applicable) the reason why they remain under review. This information is based on GAO’s 

findings and more recent information obtained by OIRA.

Table 17. Status of 15 Rules Subject to the Card Memorandum That Had Not Become 

Effective as of January 20, 2002 

Agency Rule Description Current Status

USDA Roadless Area 

Conservation 

Would prohibit road 

construction, road 

reconstruction, and timber 

harvesting in inventoried 

roadless areas on National Forest 

Service land. 

On May 10, 2001, the Idaho District 

Court enjoined the Forest Service 

from implementing the rule. On July 

10, 2001, the Forest Service issued an 

ANPRM seeking public comment on 

key issues raised by the court’s 

ruling. The May 2001 injunction is 

now under appeal in the Ninth Circuit 

Court. 
Table 17. Status of 15 Rules Subject to the Card Memorandum That Had Not Become 

Effective as of January 20, 2002 

Agency Rule Description Current Status

Energy Central Air

Conditioners and 

Heat Pump

Energy 

Conservation

Standards 

Would have set energy

conservation standards for air 

conditioners and heat pumps 

approximately 30 percent higher

than existing standards. 

On April 20, 2001, DOE delayed the 

effective date pending a decision by

the Fourth Circuit Court of Appeals 

regarding a petition for judicial

review of the original, January 2001

final rule. DOE indicated that it 

would likely resolve the issues raised

by the petition through forthcoming

rulemaking. On May 23, 2002, DOE 

withdrew the original rule and issued

a final rule raising the minimum

energy efficiency levels by 20 

percent.

HHS/FDA Prescription

Drug Policies, 

Requirements 

and 

Administrative 

Procedures 

Sets forth requirements for 

importation and wholesale 

distribution of prescription

drugs; sale, purchase or trade of

prescription drugs by hospitals

or health care entities; and

distribution of drug samples. 

On March 1, 2001, FDA delayed to

April 1, 2002, the effective date of

pending provisions, noting that the 

extension satisfied the Card Memo

requirement. The rule went into

effect on April 1, 2002. 

HHS/FDA Aluminum in

Large and Small 

Volume

Parenterals Used 

in Total 

Parenteral 

Nutrition 

Adds certain labeling

requirements, specifies upper 

limit, and requires applicant 

to submit methods for detecting

aluminum content.

On January 26, 2001, FDA extended

this rule's effective date to January 

26, 2003. FDA stated that some of 

the affected products were medically 

necessary and without alternatives, 

and could not be reformulated by the 

existing effective date. 

HHS/CMS Physicians'

Referrals to 

Health Care 

Entities With

Which They

Have Financial

Relationships 

Restricts the ability of physicians 

to make referrals for designated

health services to health care 

entities with which the physician

has a financial relationship. 

Protects the Medicare program

from potential abuse. 

On February 2, 2001, CMS delayed 

the effective date of section 424.22(d)

of the original January 2001 final rule 

until April 6, 2001. That portion of 

the rule took effect on that date. 

Except for one provision (see below), 

the remainder of the final rule went

into effect on January 4, 2002, as 

scheduled. On December 3, 2001, 

CMS delayed the effective date of the 

last sentence of section 411.354(d)(1) 

until January 6, 2003, to allow CMS 

to reconsider a key definition. 

88 
Table 17. Status of 15 Rules Subject to the Card Memorandum That Had Not Become 

Effective as of January 20, 2002 

Agency Rule Description Current Status

HHS/CMS Anesthesia

Services 

Permits States to determine 

which professionals are 

permitted to administer 

anesthesia services and the level 

of supervision required. 

On July 5, 2001, CMS 

published a proposed rule to permit

States to set supervision requirements 

for anesthesia services. On 

November 13, 2001, CMS published 

a final rule finalizing this change and 

withdrawing the original rule. 

HHS/CMS Medicaid

Managed Care 

Allows States greater flexibility 

to amend their plans to require 

certain categories of Medicaid 

beneficiaries to enroll in 

managed care without obtaining

waivers and establishes new 

beneficiary protections. 

On August 20, 2001, CMS published

a proposed rule “to address some of

the concerns that were expressed to

the Department during our review, as 

well as to allow additional 

opportunity for public comment.” On 

June 14, 2002, CMS withdrew the 

January 2001 final rule and finalized

the August 2001 proposal. 

HHS Protection of

Human Research 

Subjects 

Provides additional protections

for pregnant women and human 

fetuses involved in research and

pertains to human in vitro 

fertilization.

On November 13, 2001, HHS

published a final rule that withdrew

and replaced the original January 

2001 rule. The new rule clarified

provisions for paternal consent when

research is conducted involving 

fetuses and clarifies language that 

applies to research on newborns of

uncertain viability. 

Interior Acquisition of

Title to Land in

Trust 

Sets procedures used by Indian

tribes and individuals to acquire 

title land in trust. 

On November 9, 2001, the 

Department withdrew the final rule to

address “specific areas of concern in 

a new rule.” 

Labor Diesel

Particulate 

Matter Exposure 

of Metal and 

Nonmetal 

Miners 

Establishes new health standards 

for underground metal and

nonmetal miners working at

mines that use equipment

powered by diesel engines. 

On August 28, 2001, Labor issued a 

bulletin explaining its plan to enforce 

this standard. The bulletin stated that 

some provisions of the rule would not

go into effect until after July 19, 

2002, or January 19, 2006. 

89 
Table 17. Status of 15 Rules Subject to the Card Memorandum That Had Not Become 

Effective as of January 20, 2002 

Agency Rule Description Current Status

90 

DOT/NHTSA School Bus Body

Joint Strength 

Extends the application of

standard on school bus body

joint strength to lighter school

buses and narrows exclusions for 

maintenance access panels. 

NHTSA first issued this rule on

November 5, 1998, with an original 

effective date of May 5, 2000. 

NHTSA subsequently received 

petitions for reconsideration from

industry. On March 6, 2000, NHTSA

delayed the effective date to May 5,

2001; on April 20, 2001, NHTSA

delayed it again to June 1, 2002. 

NHTSA issued a new final rule on

December 13, 2001, that amended the 

November 1998 rule and delayed the 

effective date to January 1, 2003. 

NHTSA stated that it wanted “to 

ensure that the school bus industry

has adequate notice of the changes in

this document, and can make the die 

and tooling and other manufacturing

changes necessary to meet this final 

rule.” 

DOT/FAA Grand Canyon

National Park

Special Flight 

Rules: Area and 

Flight Free 

Zones 

Modifies the airspace in the 

special flight rules area for 

aircraft flight operations over the 

Grand Canyon National Park.

On December 5, 2001, FAA 

extended the effective date for 

portions of the rule to February 20, 

2003 to allow for an evaluation of

“new safety concerns raised by the air 

tour operators.” 

DOT/FAA Service

Difficulty

Reports 

Amends reporting requirements 

for air carriers and repair station 

operators concerning failures,

malfunctions, and defects of

aircraft engines, systems, and 

components. 

On November 23, 2001, FAA

published a final rule that delayed the 

effective date until January 16, 2003. 

FAA expects to issue a new proposed 

rulemaking. 

EPA Arsenic in

Drinking Water 

Set goals and maximum

contaminant levels for arsenic in

community water systems and 

non-transient non-community 

water systems. 

A final rule published February 22,

2002 effectively reinstated the level 

of protection reflected in the original 

January 2001 rule. 

SBA New Markets

Venture Capital

Program

Establishes the requirements for

venture capital companies to 

make developmental investments 

in smaller enterprises located in

low-income geographic areas 

and provide operational

assistance to such enterprises.

On May 23, 2001, SBA published a 

final rule withdrawing the original 

rule and finalizing new regulations 

that reflected technical changes based 

on public comments on the original 

interim final rule. 
91 

Following the issuance of the Card Memo, OMB instructed agencies to withdraw from 

OMB review regulations that they had submitted prior to January 20, 2001. Except for those 

rules that met the exemptions provided for by the Card Memo, agencies formally withdrew 130 

regulations from OMB. Since then, agencies have been resubmitting these rules to OMB. As of 

June 30, 2002, OMB has cleared 87 of the 130 regulations that were withdrawn by agencies. 

Table 18 presents the numbers of regulations that agencies withdrew from OMB and those that 

agencies then submitted to OMB for Executive Order 12866 review and approval. 

Table 18. Number of Rules Withdrawn From and Subsequently Cleared by OMB 

Agency Withdrawn 

(as of 5/18/01) Cleared (as of 6/30/02) 

Agriculture 13 9 

Commerce 5 4 

Defense 2 2 

Education 1 0 

Health and Human Services 13 9 

Housing and Urban Development 11 10 

Interior 3 0 

Justice 13 8 

Labor 2 0 

Transportation 12 9 

Veterans Affairs 18 14 

Environmental Protection Agency 21 13 

Office of Personnel Management 6 4 

Small Business Administration 3 1 

Social Security Agency 2 3 

Other 5 1 

Total 130 87 

Source: General Services Administration, Regulatory Information Service Center 
92 

APPENDIX B. KEY TO PUBLIC COMMENTS 

 OMB appreciates all of the comments we received in response to the draft report. In 

particular, we would like to thank our invited peer reviewers: Robert Hahn and Robert Litan of 

the AEI-Brookings Joint Center for Regulatory Studies, Scott Jacobs of Jacobs and Associates 

and formerly of the OECD, Richard Morgenstern of Resources for the Future, and Wendy 

Wagner of the University of Texas School of Law. Below is a listing of all the commenters and 

the numbers we assigned to their comments. 

1. T. Peter Ruane 2. Jeffrey A. Norris 

 President President 

American Road & Transportation Equal Employment Advisory 

 Builders Association Council 

3. Mark A. de Bernardo 4. Patrick Donoho 

General Counsel Vice President, Government 

Council for Employment Law Equity Relations 

International Bottled Water 

 Association 

5. Andrew T. O=Hare, P.G. 6. Laura Tague 

Vice President, Regulatory Affairs Director of Regulatory Policy 

American Portland Cement Alliance Petroleum Marketers Association 

 of America 

7. Sandra J. Boyd 8. Robert R. Rich, M.D. 

Assistant Vice President, Human President 

 Resource Policy Federation of American Societies 

National Association of Manufacturers for Experimental Biology 

Jordan J. Cohen, M.D. 

President 

Association of American Medical 

 Colleges 

9. Mark B. Roberts 10. Valley Employer Association 

COO & General Counsel 

National Association of Computer 

 Consultant Businesses 

11. Bill Hammond 12. Joe J. Mayhem 

President Vice President, Regulatory & 

Texas Association of Business Technical Affairs 

American Chemistry Council 
93 

13. Tim Hammonds 14. Glen P. Kedzie 

President and CEO Assistant General Counsel & 

Food Marketing Institute Environmental Counsel 

American Trucking Association, Inc. 

15. Leslie Sue Ritts 16. John Arnett 

Counsel to National Environmental Government Affairs Counsel 

 Development Association/Clean Copper and Brass Fabricators 

 Air Regulatory Project Council, Inc. 

17. Neil A. Mac Vicar 18. Robert J. Schreiber, Jr. P.E. 

Senior Director Region 7 BIF Work Group 

Unemployment Compensation Program Schreiber & Yonley Associates 

Michigan Health & Hospital Association 

 Service Corporation 

19. Jeff Gunnulfsen 20. Andrew Bopp 

Manager, Government Relations Executive Director 

Synthetic Organic Chemical Manufacturers Society of Glass and Ceramic 

 Association Decorators 

21. Frank A. White 22. Howard J. Feldman 

Vice President Director 

Organization Resources Counselors, Inc. Regulatory Analysis and Scientific 

 Affairs 

American Petroleum Institute 

23. S. Lawrence Kocot 24. Richard W. Newpher 

Senior Vice President and General Counsel Executive Director 

National Association of Chain Drug Stores Washington Office 

American Farm Bureau Federation 

25. Deanna R. Gelak, SPHR 26. Deron Zeppelin, PHR 

Executive Director Director, Governmental Affairs 

FMLA Technical Corrections Coalition Society for Human Resource 

 Management 

27. Cory Siansky 28. Michel R. Benoit 

Director, Administration and Public Executive Director 

 Affairs Cement Kiln Recycling Coalition 

LPA, Inc. 
94 

29. Wendy Lechner 30. Dan Danner 

Senior Director Senior Vice-President 

Federal Employment Policy Federal Public Policy 

Printing Industries of America, Inc. National Federation of Independent 

 Business 

31. David Kushner, CMP, CAE 32. William L. Kovacs 

President and CEO Vice President 

Community Hospital Medical Environment, Technology & 

 Education Alliance Regulatory Affairs 

US Chamber of Commerce 

33. Harold P. Coxson 34. Darrel J. Grinstead 

Ogletree, Deakins, Nash, Smoak Counsel to the American Ambulance 

 & Stewart, P.C. Association 

American Ambulance Association 

35. Barry Epperson 36. Lynn L. Bergeson, Esquire 

Associated Wire Rope Fabricators Eileen Salathe Gernhard, Esquire 

Rodenticide Registrants Task Force 

Bergeson & Campbell, P.C. 

37. Thomas W. Curtis 38. W. Fred McGuire 

Deputy Executive Director Chairman 

American Water Works Association Utility Solid Waste Activities Group 

39. James E. Zini, D.O. 40. Steven Wojcik 

AOA President Director, Public Policy 

American Osteopathic Association Washington Business Group on 

 Health 

41. Jason M. Lynn 42. Sandy J. Boyd 

Senior Director, Government Affairs Assistant Vice President, Human 

NATSO, Inc. Resource Policy 

National Association of 

 Manufacturers 

43. Fern Abrams 44. Mike Keegan 

Director of Environmental Policy Analyst 

IPC - The Association Connecting National Rural Water Association 

 Electronic Industries 
95 

45. Joan Claybrook 46. Lynn Shotwell 

President Legal Counsel and Director of 

Public Citizen Government Relations 

American Council on International 

 Personnel 

47. Mark D. Dopp 48. Gerald M. Howard 

Senior Vice President of Regulatory Executive Vice President 

 Affairs and General Counsel and Chief Executive Officer 

American Meat Institute National Association of Home 

 Builders 

49. Alan H. Maurer, MD 50. Rick Pollack 

President Executive Vice President 

Society of Nuclear Medicine American Hospital Association 

51. Fred R. Becker, Jr. 52. Mary Mitchell Dunn 

President/CEO Association General Counsel 

National Association of Federal Credit Union National Association 

 Credit Unions 

53. John H. Bennett 54. Tom Davis 

Vice President President, Inpatient Services 

Regulatory Matters RehabCare Group, Inc. 

California Portland Cement Company 

 

55. Mary McCabe 56. James F. Boland 

Wegmans Food Markets, Inc. Member of SRA, Retired 

Delegate to WHC on Small 

 Business 1995 

Member of SCORE 

57. William R. Howell 58. John S. Rogers 

Chief Executive Officer Chairman & CEO 

Howell Instruments World City America Inc. 

59. Nancy L. Asbill 60. David Sweet 

Senior Attorney 

Chesapeake Energy 

CNF, Inc. 
96 

61. Roger Morris 62. Jim Draxler 

Vice President of Human Resources Director, Airplane Certification 

Gill Studios, Inc. and Regulatory Affairs 

Boeing Commercial Airplanes 

63. Ed Lutz 64. Jay Teitelbaum 

Vice President President 

Workforce Relations & Diversity Adolph=s Coffee Service, Inc. 

Xcel Energy Vending Service, Inc. 

65. Brent Bedford 66. Les Kroeger 

President 

Coors of Longview, Inc. 

67. Hazel M. Willacy 

Corporate Director of Employment 

Policies and Labor Relations 

The Sherwin-Williams Company 

68. Henry I. Miller, MD 69. Professor Ragnar E. Lofstedt 

Fellow Director, King=s Centre for Risk 

The Hoover Institution Management 

School of Social Science and 

 Public Policy 

70. Tom McGarity 71. Joshua T. Cohen, Ph.D. 

President Senior Research Associate 

Center for Progressive Regulation, John S. Evans, S.D. 

 W. James Kronzer Chair in Law Senior Lecturer on Environmental 

University of Texas Law School Health 

James K. Hammitt, Ph.D. 

Associate Professor of Economics 

 and Decision Sciences 

Karen M. Kuntz, Sc.D. 

Associate Professor of Health 

 Decision Science 

Peter Neumann, Sc.D. 

Assistant Professor of Policy 

 and Decision Sciences 

Milton C. Weinstein, Ph.D. 

Henry J. Kaiser Professor of Health 

 Policy and Management 

Harvard School of Public Health 
97 

72. Ruth Ruttenberg 73. Susan E. Dudley 

Ruth Ruttenberg and Associates, Inc. Senior Research Fellow 

George Mason University 

74. Virginia Ashby Sharpe, Ph.D. 75. Margo G. Wootan, D.Sc. 

Director, Integrity in Science Director, Nutrition Policy 

Frank Clemente Center for Science in the Public 

Director, Public Citizen=s Congress Watch Health 

Rick Blum 

Senior Researcher, Integrity in Science 

Center for Science in the Public Interest 

76. Benjamin Cohen 77. Reece Rushing 

Senior Staff Attorney Policy Analyst 

Center for Science in the Public OMB Watch 

 Interest 

78. James Gattuso 79. Richard B. Belzer, Ph.D. 

Research Fellow in Regulatory Policy President 

The Heritage Foundation Regulatory Checkbook 

80. Wesley P. Warren 81. Karen L. Egbert 

Senior Fellow for Environmental Senior Attorney 

 Economics Food Safety Project 

Natural Resources Defense Council Caroline Smith DeWaal 

Director, Food Safety Program 

82. V. Kerry Smith 83. Jim J. Tozzi 

University Distinguished Professor Member, Board of Advisors 

NC State University Center for Regulatory Effectiveness 

84. Michael R. Taylor 85. Robert W. Hahn 

Resources for the Future Director 

AEI-Brookings Joint Center 

86. Phyllis Stadler 87. Roberta Hudgins Turner 

Director of Human Resources SPHR, IPMA-CP 

City of Richardson, Texas HR Consultant 

Commonwealth of Virginia 

88. John C. Horsley 89. Susan Combs 

Executive Director Commissioner 

American Association of State Highway Texas Department of Agriculture 

 And Transportation Officials 
98 

90. Jim Thiel 

General Counsel 

Wisconsin DOT 

91. Rosemary Mucklow 92. John Herzog 

Executive Director Air Conditioning Contractors 

National Meat Association of America 

93. Wendy R. Keegan 

Regulatory Affairs Fellow 

Public Citizen Congress Watch 

94. Chris Spear 95. Trip Rothschild 

U.S. Department of Labor Assistant General Counsel for 

 Legal Counsel, Legislation and 

 Special Projects 

Nuclear Regulatory Commission 

96. James Tate, Jr., Ph.D. 97. Thomas M. Sullivan 

Science Advisory to the Secretary Chief Counsel for Advocacy 

U.S. Department of the Interior Shawne Carter McGibbon 

Director of Interagency Affairs 

SBA Office of Advocacy 

98. Susan H. Steiman 99. Thomas J. Gibson 

Associate General Counsel Associate Administrator 

Federal Communications Commission United States Environmental 

 Protection Agency 

100. John S. Applegate 101. John J. Cohrssen 

Walter W. Foskett Professor of Law Executive Director 

Indiana University School of Law Public Health Policy Advisory 

Wendy Wagner Board 

Joe A. Worsham Centennial Professor 

University of Texas School of Law 

102. Daniel V. Yager 103. Michael Altschul 

Vice President and General Counsel Senior Vice President 

LPA, Inc. and General Counsel 

Cellular Telecommunications 

 & Internet Association 
99 

104. Wendy E. Wagner 105. Richard Morgenstern 

Joe A. Worsham Centennial Professor 

106. Scott Jacobs 

Managing Director 

Jacobs and Associates 

107. Doug Ose 108. Doug Ose 

Chairman Chairman 

Subcommittee on Energy Policy, Subcommittee on Energy Policy, 

 Natural Resources and Regulatory Natural Resources and Regulatory 

 Affairs Affairs 

109. AJ Parsons 110. Terry L. Daugherty 

President & Owner Antique Rose Flowers and Gifts 

Direct-Xpress 

111. Bernard Gray 112. Betty R. Jackson, C.P.A., Ph.D. 

113. Bill Hutchings 114. Bob Thomas 

Garden City, KS Cartridge Discounters 

115. Cathy Craig 116. Ronald Maylath 

San Clemente, CA Garden City, SC 

117. Cheryl Ann Dunlap 118. Dan Jaoudi 

US Marketing and Customer Relations President 

 Director J & B Manufacturing Corp 

ForeFront Technologies, LLC 

119. Daran Rehmeyer, PE, CDT 120. David Zimmerman 

GeoSpec, LLC Atlantic Sunroom Manufacturing 

Baton Rouge, LA 

121. Doria Kutrubes, M.Sc., Geophysical 122. Doris Thomas 

 Engineering Vice President 

President Technology Interchange Resources 

Radar Solutions International 

123. Edward L. and Carol J. Wimberly 124. W.E.(Em) Fluhr, Ph.D., P.E. 

Lake Roosevelt Vacation, Inc. Chief Executive Officer 

2-10 Home Buyers Warranty 
100 

125. Leslie Lange 126. Frank Stott 

The Fluttering B Butterfly Ranch Certified Professional Geologist 

127. Gary Scott 128. Gary L. Humphrey 

GMH Industries, LLC 

129. Larry S. Duran, MPA 130. Jack Irwin DDS 

President/CEO Brooklyn, NY 

DURA-N- Company Enterprises, Inc., 

 d.b.a. IBC 

131. James F. Boland 132. James F. Boland 

Idaho Falls, ID Idaho Falls, ID 

133. Jill Tanenbaum 134. Jennifer Garcia, Ph.D. 

President and Creative Director 

Jill Tanenbaum Graphic Design 

 & Advertising Inc. 

135. Jim Jorgensen 136. Mr. & Mrs. Ken Belknap 

137. Kelly E. Goddard 138. Kenneth R. Maser, Ph.D, P.E. 

President President 

Goddard Concrete Co. Inc. INFRASENSE, Inc. 

Sand Division 

139. Kenneth F. Webster 140. Malcolm Burchfiel 

Crestview, FL 

141. Mark D. Gibson 142. Robert Marling 

General Manager Green Oaks, IL 

Timberland Logging 

143. Mike Schnezler 144. Michael Ford 

Presidential Mortgage Corporation 

South Carolina Mortgage Broker=s 

 Association 

145. Katharina Phillips 146. Katharina Phillips 

Council on Governmental Relations Council on Governmental Relations 

 COGR COGR 
101 

147. Neil A. Mac Vicar 148. John S. Hurley MS RD 

Senior Director Unemployment Gila River Indian Community 

 Compensation Program Sacaton, AZ 

Michigan Health and Hospital Association 

 Service Corporation 

149. George E. Parris, Ph.D. 150. Mark B. Roberts 

COO and General Counsel 

National Association of Computer 

 Consultant Businesses 

151. Kathy Rebola 152. Patricia Freeman 

Palatka, FL 

153. Jaffus Hardrick 154. IPMA 

Waco, TX Alexandria VA 

155. Eric Oxfeld 156. Everall A. Peele, MPH, RHIA 

UWC Strategy Gainesville, FL 

Washington, DC 

157. C. R. Dunbar 158. C. R. Dunbar 

Denham Springs, LA Denham Springs, LA 

159. Mike Collins 160. Matt Flanagan 

Sarasota, FL Pomona, CA 

161. Matt Flanagan 162. Laurie Gronlund 

Pomona, CA 

163. Laurie Gronlund 164. Brad D. Dudley 

Rapid City, SD 

165. Samantha Curto 166. Angela Townley 

Omaha, NE 

167. High Mountain Heli-Skiing, Inc. 168. Nicole Gartzke 

Teton Village WY 

169. Mary Curtin 170. Bob G. Shupe 

Brentwood, TN 

171. Denise Ashby 172. Renee Pearison 

Crozet, VA 
102 

173. Harold T. Fujita 174. Mark G. Kick 

Department of Recreation and Parks Westford, MA 

Los Angeles, CA 

175. Paul K. Savage 176. Tibor Hegedus 

CEO 

Quantum Energy Solutions 

177. Dennis L. Costello, MD 178. Jerry W. Plant, CFA, CPA 

Oklahoma City, OK 

179. Michael H. Levin 180. Ralph H. Smith 

High Plains Engineering 

181. Marjorie A. O=Connell 182. Lynn Martin 

O=Connell & Associates 

183. Heather M. Stewart 184. Cynthia Hilton 

Legislative Counsel Executive Vice President 

American Council on International Institute of Makers of Explosives 

 Personnel 

185. Daniel J. Popeo 186. Angela Logomasini 

Chairman and General Counsel Director of Risk and Environmental 

Paul D. Kamenar Policy 

Senior Executive Counsel Competitive Enterprise Institute 

Washington Legal Foundation 

187. Patrick Bennett 188. Larry Alexander 

Director of Environmental Affairs Director of Environmental and 

Indiana Manufacturers Association Quality Control 

Alamo Cement Company 

189. Earl Bouse 190. Roxanne L. Scott 

Vice President, Manufacturing Associate Director 

Hanson Permanente Cement Federal Relations 

SBC Communications 

191. George Parris, Ph.D 192. Hal Hawk 

 Gaithersburg, MD President 

Crown Battery 
103 

193. Patrick Bennett 194. Jennifer Young 

Director of Environmental Affairs 

Indiana Manufacturers Association 

195. D. Randall Jones 196. Ajay Kumar 

Vice President Manager, Env. Affairs 

Corporate Communications and 

 Government Affairs 

TXI Operations 

197. Lee Deierling 198. Paul Sarbanes 

Managing GP United States Senator 

Vilelli Enterprises 

199. Ed Pastor 200. Ann Gosier 

U.S. House of Representatives Vice President, Government Affairs 

Guidant Corporation 

201. J. E. Bauknight IV 202. Charles O. Howarth 

Vice President Senior Vice President 

Shred First CAHHS Unemployment Insurance 

 Division 

203. Henry J. Hood 

Chesapeake Energy Corporation 
104 

APPENDIX C. STATUS OF THE 23 HIGH-PRIORITY RULES 

OIRA SUGGESTED FOR REFORM IN 2001 

In the draft version of the 2001 annual report, OMB asked for suggestions from the 

public about specific regulations that should be modified or rescinded in order to increase net 

benefits to the public. We received suggestions regarding 71 regulations from 33 commenters 

involving 17 agencies. In an initial review of the comments, OIRA placed the suggestions into 

three categories: high priority, medium priority, and low priority. 

Twenty-three agency actions were rated Category 1, “high priority review” candidates. 

Since the publication of last year's report, OIRA has discussed these regulations with the 

agencies to better understand where they fit with agency priorities. Commenters responding to 

the March 2002 draft report also nominated some of these rules again this year. As detailed 

below, agencies have already taken action on a number of these suggestions. On others, agencies 

have agreed to consider the need for reform and will be evaluating specific actions. Finally, for 

some, agencies have convinced us that reform is unnecessary or not appropriate at this time. A 

status report on the high priority reviews is provided below. 

USDA: Forest Service Planning Rules and Roadless Area Conservation Regulations 

(Two Rules)—On May 10, 2001, a Federal judge issued an injunction blocking implementation 

of the roadless rule and a portion of the forest planning rule. In July 2001, the Forest Service 

issued an advanced notice soliciting comments on possible changes to the roadless rule in light 

of the court action. Further action awaits the Forest Service's consideration of comments. The 

Forest Service plans to submit revisions to the Forest Service Planning Rule to OMB. 

Department of Education: Regulations Related to Financial Aid—These regulations are 

the subject of annual regulatory negotiations. For this year the Department has made clear its 

commitment to streamlining the regulations consistent with statutory requirements. The 

Department published NPRM’s in August and will finalize the rules this fall. The Federal 

Family Education Loan Program was nominated for reform by the public again this year. 

Department of Energy: Central Air Conditioning and Heat Pump Energy Conservation 

Standards—On January 22, 2001, DOE promulgated a regulation that would have raised the 

energy efficiency of new central air conditioners by 30 percent. On May 23, 2002, DOE 

withdrew this rule and issued a final rule raising the minimum energy efficiency levels by 20 

percent. This rule was nominated for reform by the public again this year. 

Department of Health and Human Services: Standards for Privacy of Individually 

Identifiable Health Information—On August 14, 2002, HHS published final revisions to this rule 

clarifying some aspects and modifying others. The rule as amended goes into effect on April 12, 

2003. This rule was nominated for reform by the public again this year. 

Department of Health and Human Services: Food Labeling: Trans Fatty Acids in 

Nutrition Labeling, Nutrient Content and Health Claims—OIRA Administrator John D. Graham 
105 

sent a prompt letter to FDA on September 18, 2001 urging the agency to finalize this rulemaking. 

Secretary Thompson responded on November 26, 2001, agreeing that finalization was a high 

priority. FDA has recently announced that it plans to finalize this rule by the end of calendar 

year 2002. 

Department of the Interior: Amendments to National Park Service Snowmobile 

Regulations (Rocky Mountain)—Interior had issued a proposed rule on January 5, 2001, and a 

draft environmental impact statement in December 2000. Interior has not issued a final rule. 

Currently, the proposed rule is under internal departmental review. This rule was nominated for 

reform by the public again this year. 

Department of the Interior: Regulations Governing Hardrock Mining Operations—DOI 

completed a revision of these regulations on October 31, 2001. 

Department of Labor: Procedures for Certification of Employment- Based Immigration 

and Guest Worker Applications—On November 21, 2001, DOL submitted a proposed regulation 

on this subject to OMB for review. We completed review on February 19, 2002. DOL 

published the proposed rule in April 2002. DOL is currently in the process of addressing 

comments and finalizing the rule. 

Department of Labor: Proposal Governing “Helpers” on Davis-Bacon Act Projects—

DOL has decided that changes in the Davis-Bacon regulations are not appropriate at this time. 

Department of Labor: Overtime Compensation Regulations Under the Fair Labor 

Standards Act—DOL is considering whether revisions to these regulations would be appropriate. 

Department of Labor: Recordkeeping and Notification Requirements Under the Family 

and Medical Leave Act (FMLA)—DOL is considering whether revisions to these regulations 

would be appropriate. Additional aspects of the FMLA rules were nominated for reform by the 

public again this year. 

Department of Labor: Affirmative Action and E.O. Survey—DOL is considering whether 

modifications to the survey would be appropriate. The Survey was nominated for reform by the 

public again this year. 

Department of Transportation: Hours of Service of Drivers—DOT proposed changes to 

these regulations in 2000 and continues to consider revisions. Any final rule will reflect public 

comments in response to the notice of proposed rulemaking. This rule was nominated for reform 

by the public again this year. 

Equal Employment Opportunity Commission: Uniform Guidelines for Employee 

Selection Procedures—EEOC has requested and received several extensions of clearance of 

these guidelines under the Paperwork Reduction Act to allow further consideration of changes. 
106 

Environmental Protection Agency: “Mixture and Derived From” Rule—EPA is 

considering whether revisions to these regulations would be appropriate. EPA plans to submit 

revisions to this rule to OMB for review this fall. 

Environmental Protection Agency: Proposed Changes to the Total Maximum Daily Load 

Program—EPA published a notice in October 2001 delaying the effective date of the new 

TMDL rule for 18 months, in order to allow time to consider possible revisions to the rule. The 

agency then conducted extensive “listening sessions” with stakeholders and has now prepared a 

draft proposed rule that addresses many of the concerns raised. EPA expects to publish the 

proposed rule for public comment this fall. This rule was nominated for reform by the public 

again this year. 

Environmental Protection Agency: Drinking Water Regulations: Cost Benefit Analyses—

OIRA is addressing these issues in its forthcoming analytic guidance. This guidance was 

nominated for reform by the public this year. 

Environmental Protection Agency: Economic Incentive Program Guidance—EPA issued 

guidance in January 2001, and the States are now using the guidance in developing economic 

incentive programs. OIRA will consider further review of the guidance after the States 

have further experience with the current guidelines. This guidance was nominated for reform by 

the public again this year. 

Environmental Protection Agency: New Source Review—EPA has submitted these 

regulations for OMB review. This rule was nominated for reform by the public this year. 

Environmental Protection Agency: Concentrated Animal Feeding Operations Effluent 

Guidelines—This rule was proposed in December 15, 2000. EPA has a court deadline to 

promulgate a final rule by December 2002. During the past year, EPA has issued two Notices of 

Data Availability providing additional information and soliciting public comment on additional, 

more flexible regulatory options. The draft final rule will be submitted for E.O. 12866 review 

later this calendar year. This rule was nominated for reform by the public again this year. 

Environmental Protection Agency: Arsenic in Drinking Water—EPA has decided not to 

modify this final rule. This rule was nominated for reform by the public again this year. 

Environmental Protection Agency: Notice of Substantial Risk: TSCA—EPA is 

considering several options to address the issues raised in its last report. EPA has established a 

new TSCA 8(e) web page that contains guidance, previous 8(e) submissions, and new 

submissions posted within two weeks of receipt. EPA is also working on a package that would 

make policy clarifications. 
107 

APPENDIX D. REGULATIONS REVIEWED BY AGENCY: 1998 TO 2001

TOTAL 2001 2000 1999 1998 

USDA S 225 53 56 69 47 

ES 46 8 24 10 4 

HHS S 334 66 89 88 91 

ES 101 28 26 22 25 

EPA S 201 52 51 42 56 

ES 56 9 18 15 14 

DOT S 129 48 29 26 26 

ES 38 14 7 8 9 

 

DOC S 139 20 47 46 26 

ES 11 2 4 4 1 

DOI S 142 32 63 28 19 

ES 16 3 6 4 3 

ED S 58 0 29 23 6 

ES 1 0 0 1 0 

HUD S 126 35 29 36 26 

ES 6 0 2 3 1 

VA S 113 68 12 20 13 

ES 5 4 1 0 0 

DOJ S 108 39 29 13 27 

ES 4 2 0 1 1 

OPM S 121 32 37 28 24 

 ES 0 0 0 0 0 

Sum S 1,696 445 471 419 361 

ES 284 70 88 68 58 

*Data are all for years beginning 2/1 and extending through 1/31 the next year. 

S = Significant rulemaking 

ES = Economically significant rulemaking 
108 

APPENDIX E. CALCULATIONS OF COSTS AND BENEFITS: EXPLANATION 

Chapter II presents estimates of the annual costs and benefits of selected final major 

regulations reviewed by OMB between April 1, 1995 and September 30, 2001. The explanation 

of the calculations for the major rules reviewed by OMB between April 1, 1995 and March 31, 

1999, can be found in Chapter IV of our 2000 report (OMB 2000). Table 19 of this 2002 Report 

presents OIRA=s estimates of the benefits and costs of the 20 individual rules reviewed between 

April 1, 1999 and September 30, 2001 which were included in Table 7. All benefit and cost 

estimates were adjusted to 2001 dollars. 

Four EPA regulations were removed to prevent double counting. We decided to exclude 

the benefit and cost estimates for the new National Ambient Air Quality Standards (NAAQS) for 

ozone and fine particulate matter. EPA has adopted a number of key rules in the ensuing five 

years—for example, the “NOx SIP Call”, the Regional Haze rule, the “Tier 2" rule setting 

emission limits for light duty vehicles, and the Heavy Diesel Engine rules setting emission limits 

for on-highway diesel engines. These rules will achieve emission reductions and impose costs 

that were also included in the EPA benefit and cost estimates developed for the NAAQS rules. 

EPA issued its Tier 2 rule in 1999 setting emission standards for light duty cars and trucks 

beginning in 2004. The Tier 2 rule will largely supercede EPA’s 1996 rule establishing 

Voluntary Standards for Light-Duty Vehicles beginning in 2002. EPA also issued a 1998 rule 

limiting Heavy Duty Diesel Engine emissions beginning in 2004 and Areaffirmed@ this rule in a 

final rule issued in 2001. OIRA has used the benefit and cost estimates from EPA=s 2001 

rulemaking (instead of the 1998 rulemaking) because we believe the 2001 analysis provides a 

better estimate of the likely emission reductions and costs of these emission standards. 

In assembling estimates of benefits and costs, OIRA has: 

(1) applied a uniform format for the presentation of benefit and cost estimates in 

order to make agency estimates more closely comparable with each other (for 

example, annualizing benefit and cost estimates); and 

(2) monetized quantitative estimates where the agency has not done so (for example, 

converting Agency projections of quantified benefits, such as, estimated injuries 

avoided per year or tons of pollutant reductions per year to dollars using the 

valuation estimates discussed below). 

 The adoption of a uniform format for annualizing agency estimates allows, at least for 

purposes of illustration, the aggregation of benefit and cost estimates across rules. While OIRA 

has attempted to be faithful to the respective agency approaches, the reader should be cautioned 

that agencies have used different methodologies and valuations in quantifying and monetizing 

effects. Thus, this aggregation involves the assemblage of benefit and cost estimates that are not 

comparable. 
Table 19. Estimate of Benefits and Costs of 20 Major Rules

April 1, 1999 to September 30, 2001 (Annualized 2001 Dollars in Millions)

1999-2000

Regulation Agency Benefits Costs Explanation

Lead-Based Paint 

Hazards 

HUD 190 150 Both costs and benefits come from Table 4 of

the 2001 report. The present value estimates are 

amortized over five years. 

Storm Water 

Discharges Phase 

II 

EPA 700-1,700 900-1,100 From Table 4 of 2001 report. 

Tier 2 Motor 

Vehicle Emission 

Standards 

EPA 7,300-13,400 4,000 EPA provided a monetized benefit estimate only

for the year 2030. EPA also estimated emission

reductions for various individual years between 

2004 and 2030. We assumed that the monetized

benefits were directly correlated with emission 

reductions. We developed an annualized stream

of emission reductions by interpolating 

between years for which EPA provided

estimates. We then prorated the monetized 

benefits annually in proportion to the annual 

emission reductions. Finally, we annualized the 

resulting stream of monetized benefits. We used

EPA’s annual cost estimates to develop the

annualized cost estimates. 

Regional Haze EPA 300-7,000 300-1,600 EPA provided a monetized benefit and cost

range of estimates only for the year 2015. EPA 

also estimated emission reductions targeted

for improving visibility for various individual 

years between 2010 and 2015. We assumed that 

the monetized benefits were directly correlated

with emission reductions. We developed an

annualized stream of emission reductions by

assuming a linear improvement in haze from

2010 to 2015. We then prorated the monetized

benefits annually in proportion to the annual 

emission reductions. Finally, we annualized the 

resulting stream of monetized benefits. We used

EPA’s annual cost estimates to develop the 

annualized cost estimates. 

Handheld

Engines 

EPA 170-890 190-250 EPA reported only combined nitrogen oxide plus 

hydrocarbon emission reductions (Table 4 in

2001Report). We assumed that the reductions 

consist of 80% hydrocarbons and 20% nitrogen

oxides. We valued hydrocarbons at $ 520-$2360

per ton and nitrogen oxides at $700-$4900 per 

ton. Costs and benefits are taken directly from

Table 4: Summary of Agency Estimates for

Final Rules 4/1/99-3/31/00, converted to 2001 $. 

Total 8,600-23,180 5,540-7,100

109 
110 

2000-2001

Regulation Agency Benefits Costs Explanation 

Roadless Area 

Conservation 

USDA 0.219 184 Both costs and benefits come from Table 7: 

summary of Agency Estimates for Final Rules, 

4/1/00-9/30/01. The benefits are taken as given. 

Costs aggregate the total short-term and longterm per-year costs provided. 

Energy 

Conservation 

Standards for 

Fluorescent 

Lamp Ballasts 

DOE 280 70 Benefits and costs are estimated by amortizing 

the estimated present value of $3.51 billion in 

benefits and $.9 billion in costs over the next 30 

years. 

Energy 

Conservation 

Standards for 

Water Heaters 

DOE 680 510 Benefits and costs are estimated by amortizing 

the estimated present value of $8.6 billion in 

benefits and $6.4 billion in costs over the next 

30 years. 

Energy 

Conservation 

Standards for 

Clothes Washers 

DOE 2,150 940 Benefits and costs are estimated by amortizing 

the estimated present value of $27.2 billion in 

benefits and $11.9 billion in costs over the next 

30 years. 

Health Insurance 

Reform: 

Standards for 

Electronic 

Transactions 

HHS 2,720 700 Benefits are estimated by annualizing the $19.1 

billion present value of benefits estimated to 

accrue in the next 10 years. Costs are estimated 

by assuming that the estimated $7 billion of 

costs occur evenly over the next 10 years. 

Safe and Sanitary 

Processing and 

Importing of 

Juice 

HHS 150 30 Benefits above are identical to what is listed 

in Table 7; the costs are estimated as $23 million 

per year with an up-front costs of $44-$55 

million in the first year. The first year costs are 

amortized over the next 30 years. 

Standards for 

Privacy of 

Individually 

Identifiable 

Health 

Information 

HHS 2,700 1,680 Amortized the net present value of benefits 

and costs of $19 billion and $11.8 billion 

respectively. 

Labeling of Shell 

Eggs 

HHS 261 15 Benefits above are identical to what is listed in 

Table 7; the costs are estimated as $10 million 

per year with an up-front cost of $56 million in 

the first year. The first-year costs are amortized 

over the next 30 years. 

Safety Standards 

for Steel Erection 

DOL 167 78 Benefits are estimated at 22 fatalities averted and 

1,142 injuries averted per year. Each fatality 

averted is valued at $5 million, and each injury 

averted is valued at $50,000. Costs are agency 

figures. 

Advanced 

Airbags 

DOT 140-1,600 400-2,000 Based on methodology in NHTSA’s “The 

Economic Cost of Motor Vehicle Crashes, 

1994.” 
111 

Identification of 

Dangerous 

Levels of Lead 

EPA 1,750-6,840 2,700 Calculated by amortizing the estimated present 

value of benefits of $45-$176 billion as well as 

the estimated present value of benefits of $70 

billion using a discount rate of 3%, a rate 

explicitly specified EPA in this rule. 

Arsenic and 

Clarifications 

EPA 140-198 206 Both costs and benefits taken directly from 

Table 7. 

National 

Emission 

Standards for 

Hazardous Air 

Pollutants for 

Chemical 

Recovery 

EPA 293-393 32 Both costs and benefits taken directly from 

Table 7 

Heavy-Duty 

Engine and 

Vehicle 

Standards 

EPA 13,000 2,400 We estimated the present value of the stream 

of costs and benefits generated until 2030, 

deflated the present value to 2001$’s, and then 

annualized the streams. 

2004 and Later 

Model Year 

Highway Heavy 

Duty Engines 

EPA 1,840-12,650 482 We valued nitrogen oxide reductions at $700-

$4,900 per ton and hydrocarbons at $520-$2,360 

per ton. 

Total 26,435-43,789 10,445-12,045 

Assumptions: 7 percent discount rate unless another rate explicitly identified by the agency. For DOL: $5 million 

VSL assumed for deaths averted when not already quantified. Injuries averted valued at $50,000 from Viscusi.53 

All values converted to 2001 dollars. All costs and benefits stated on a yearly basis.

Valuation Estimates for Regulatory Consequences54

 

Agencies continue to take different approaches to monetizing benefits for rules that affect 

small risks of premature death. As a general matter, we have deferred to the individual agencies=

judgment in this area. In cases where the agency both quantified and monetized fatality risks, we 

have made no adjustments to the agency=s estimate. In cases where the agency provided a 

quantified estimate of fatality risk, but did not monetize it, we have monetized these estimates in 

order to convert these effects into a common unit. For example, in the case of HHS=s organ 

donor rule, the agency estimated, but did not monetize, statistical life-years saved (although it 

has discussed a figure of $116,500 per life-year saved in other contexts). OIRA valued those 

life-years at $116,500 each. For NHTSA=s child restraint rule, OIRA used DOT’s recommended 

estimate of $3 million per statistical life to value life saving benefits. [DOT, Fatality and Injury 

Risk Reduction: Departmental Guidance in the Conduct of Economic Evaluations] 

http://ostpxweb.dot.gov/VSL_1993_Guidance.pdf. 

53W. Kip Viscusi, Fatal Tradeoffs: Public & Private Responsibilities for Risk. New York, NY, Oxford University 

Press, 1992, p. 65. 

54The following discussion updates the monetization approach used in previous reports and draws on examples from 

this and previous years.
112 

 

In cases where agencies have not adopted estimates of the value of reducing these risks, 

OIRA used estimates supported by the relevant academic literature.55 OIRA did not attempt to 

quantify or monetize fatality risk reductions in cases where the agency did not at least quantify 

them. 

The following is a brief discussion of OIRA=s valuation estimates for other types of 

effects that agencies identified and quantified, but did not monetize. As a practical matter, the 

aggregate benefit and cost estimates are relatively insensitive to the values we have assigned for 

these rules because the aggregate benefit estimates are dominated by those rules where EPA 

provided quantified and monetized benefit and cost estimates. 

Injury. For the child restraint rule, we adopted the Department of Transportation’s 

approach of converting nonfatal injuries to “equivalent fatalities.” These ratios are based on 

DOT=s estimates of the value individuals place on reducing the risk of injury of varying severity 

relative to that of reducing risk of death.56 For the OSHA industrial truck operator rule, OIRA 

did not monetize injury benefits beyond OSHA=s estimate of the direct cost of lost workday 

injuries. For the OSHA safety standards for steel erection, OIRA monetized injury benefits 

using a value of $50,000 per injury averted. 

I. Change in Gasoline Fuel Consumption. We valued reduced gasoline 

consumption at $.80 per gallon pre-tax. This equates to retail (at-the-pump) prices in the 

$1.10 - $1.30 per gallon range. 

II. Reduction in Barrels of Crude Oil Spilled. OIRA valued each barrel prevented 

from being spilled at $2,000. This is double the sum of the most likely estimates of 

environmental damages plus cleanup costs contained in a published journal article 

[Brown and Savage, “The Economics of Double-Hulled Tankers,” Maritime Policy and 

Management, Volume 23(2), 1996, pages 167-175.] 

III. Change in Emissions of Air Pollutants. We used estimates of the benefits per ton 

for reductions in hydrocarbon and nitrogen oxide emissions derived from recent EPA 

regulatory analyses, as follows (1996$): 

Hydrocarbon: $520 and $2360 per ton 

Nitrogen Oxide (stationary): $350 and $2500 per ton 

Nitrogen Oxide (mobile): $700 and $4900 per ton 

55As a result of OSHA=s interpretation of the Supreme Court’s decision in the “Cotton Dust” case, American Textile 

Manufacturers Institute v. Donovan, 452 U.S. 491 (1981), OSHA does not conduct cost-benefit analysis or assign 

monetary values to human lives and suffering.

56National Highway Traffic Safety Administration, The Economic Cost of Motor Vehicle Crashes, 1994, Table A-1.

http://www.nhtsa.dot.gov/people/economic/ecomvc1994.html 
113 

 The estimates for reductions in hydrocarbon emissions were obtained from EPA’s RIA 

for the 1997 rule revising the primary NAAQS for ozone and fine PM. OIRA has revised the 

estimates for reductions in NOx emissions to reflect a range of estimates from recent EPA 

analyses for several rules and for proposed legislation. In particular, OIRA has adopted different 

benefit transfer estimates for NOx reductions from stationary sources (e.g., electric utilities) and 

from mobile sources. EPA believes that there are a number of reasons to expect that reductions 

in NOx emissions from utility sources achieve different air quality improvements relative to 

reductions from ground-level mobile sources. For example, mobile source tailpipe emissions are 

located in urban areas at ground level (with limited dispersal) while electric utilities emit NOx

from “tall stacks” located in rural (remote) locations with substantial geographic dispersal 

(Letter to Don Arbuckle, Deputy Administrator, OIRA from Tom Gibson, Associate 

Administrator, Office of Policy, Economics and Innovation, EPA, May 16, 2002.) There remain 

considerable uncertainties with the development of these estimates. The discussion below 

outlines the various EPA analyses serving as the basis for the NOx benefit transfer values 

presented above and discusses the uncertainties that attend these estimates. 

Analysis of recent EPA rules yield several estimates for the NOx benefits per ton from 

electric utility sources. (See the Regulatory Impact Analyses for the “NOx SIP Call” and the 

Section 126 rules, available on the web at http://www.epa.gov/ttn/ecas/econguid.html. In 

addition, see Memo to NSR Docket from Bryan Hubbell, Senior Economist, Innovative 

Strategies and Economics Group, EPA.) Based on these studies, the upper end of the range for 

the benefits of NOx reductions from stationary sources (electric utilities) is $2500 per ton. 

 For mobile sources, EPA recently published the final Tier 2/Gasoline Sulfur rule RIA 

(EPA, 1999) and Heavy Duty Engine/Diesel Fuel RIA (EPA, 2000). For the Tier 2 rule, which 

affects light-duty vehicles, NOx reductions account for around 90 percent of PM precursor 

emissions and 86 percent of ozone precursor emissions. Based on the final Tier 2/Gasoline 

Sulfur RIA, EPA estimates that NOx reductions will yield benefits of $4,900/ton (1996$). EPA 

believes this analysis provides a more appropriate source for the NOx benefit transfer value for 

mobile sources. (Letter from Tom Gibson, pp. B2 and B3, May 16, 2002.) Additional details on 

the Tier 2 benefits analysis are available in the Tier 2/Sulfur Final Rulemaking RIA, available on 

the web at http://www.epa.gov/oms/fuels.htm. 

 The Heavy Duty Engine/Diesel Fuel benefits analysis examined the impacts in 2030 of 

reducing SO2 emissions by 141,000 tons and NOx emissions by 2,750 thousand tons, as well as a 

109,000 ton reduction in direct PM emissions. Based on this analysis, EPA estimates a value for 

NOx reductions of $10,200/ton in 2030. (Letter from Tom Gibson, p.B3, May 16, 2002.) 

Complete details of the emissions, air quality, and benefits modeling conducted for the HD 

Engine/Diesel Fuel Rule can be found at http://www.epa.gov/otaq/diesel.htm and 

http://www.epa.gov/ttn/ecas/regdata/tsdhddv8.pdf. Because the Heavy Duty Engine/Diesel Fuel 

estimate includes an adjustment for income growth out to 2030 and involves reductions in 

several PM-related pollutants, OIRA has adopted a value of $4900 per ton from EPA’s analysis 

of the Tier 2 rule as a benefits transfer value for reductions in NOx emissions from mobile 

sources. 
114 

Reductions in the risk of premature mortality dominate the benefits estimates in all of 

these analyses. The size of the mortality risk estimates from the underlying epidemiological 

studies, the serious nature of the effect itself, and the high monetary value ascribed to prolonging 

life make mortality risk reduction the most important health endpoint quantified in these 

analyses.57 Because of the importance of this endpoint and the considerable uncertainty among 

economists and policymakers as to the appropriate way to value reductions in mortality risks, 

EPA has developed alternative estimates for its “Clear Skies” legislation that show the potential 

importance of some of the underlying assumptions. (See “Human Health and Environmental 

Benefit Achieved by the Clear Skies Initiative” at http://www.epa.gov/clearskies.) OIRA has 

used this analysis to identify an alternative estimate of the benefits from NOx reductions. In its 

Clear Skies analysis, EPA presented alternative benefits estimates of $14 billion and $96 billion 

per year in 2020, or a difference in the estimates of roughly a factor of seven.58 Using this ratio, 

an alternative estimate of the benefits of NOx reductions from stationary sources would be $350 

per ton from stationary sources and $700 per ton from mobile sources. 

 

OIRA recognizes that there are potential problems and significant uncertainties that are 

inherent in any benefits analysis based on $/ton benefit transfer techniques. The extent of these 

problems and the degree of uncertainty depends on the divergence between the policy situation 

being studied and the basic scenario providing the benefits transfer estimate. Examples of other 

factors include sources of emissions, meteorology, transport of emissions, initial pollutant 

concentrations, population density, and population demographics, such as the proportion of 

elderly and children and baseline incidence rates for health effects. Because of the uncertainties 

associated with benefits transfer, OIRA decided not to include three rules that are projected to 

achieve substantial reductions in SO2 and PM emissions that OIRA included in previous years in 

the monetized estimates presented in Tables 5 and 6.59

57 There are several key assumptions underlying the benefit estimates for reductions in NOx emissions, including: 

1. Inhalation of fine particles is causally associated with premature death at concentrations near those 

experienced by most Americans on a daily basis. While no definitive studies have yet established any of 

several potential biological mechanisms for such effects, the weight of the available epidemiological 

evidence supports an assumption of causality. 

2. All fine particles, regardless of their chemical composition, are equally potent in causing premature 

mortality. This is an important assumption, because fine particles from power plant emissions are 

chemically different from directly emitted fine particles from both mobile sources and other industrial 

facilities, but no clear scientific grounds exist for supporting differential effects estimates by particle type. 

3. The concentration-response function for fine particles is approximately linear within the range of outdoor 

concentrations under policy consideration. Thus, the estimates include health benefits from reducing fine 

particles in both attainment and non-attainment regions. 

4. The forecasts for future emissions and associated air quality modeling are valid. 

58 The difference between the estimates reflects several assumptions, including differences in the estimation and 

valuation of mortality risk and the valuation of a reduction in the incidence of chronic bronchitis. 

59 These are: Municipal Waste Combustors (1995), Emission Standards for New Locomotives (1997) and Emission 

Standards for Non-Road Diesel Engines (1998).
115 

Adjustment for Differences in Time Frame Across These Analyses

 Agency estimates of benefits and costs cover widely varying time periods. The 

differences in the time frames used for the various rules evaluated generally reflect the specific 

characteristics of individual rules such as expected capital depreciation periods or time to full 

realization of benefits. For example, EPA only developed benefit estimates for a single year 

(2030) for the Tier 2 rule and the Heavy Duty Diesel Engine rules because of the difficulty of 

doing the air quality modeling necessary to support development of benefits estimates over 

multiple years. HHS analyzed the effects of providing transplant-related data from 1999 through 

2004, other agencies generally examined the effects of their regulations over longer time periods. 

HHS used a 10-year period for its over-the counter drug labeling rule; DOL also used a 10-year 

period for its truck operator training rule. EPA=s analyses on disinfection and enhanced water 

treatment rules evaluated the effects over a 20-year period. 

 

In order to allow us to provide an aggregate estimate of benefits and costs, we developed 

benefit and cost time streams for each of the rules. Where agency analyses provide annual or 

annualized estimates of benefits and costs, we used these estimates in developing streams of 

benefits and costs over time. Where the agency estimate only provided annual benefits and costs 

for specific years, we used a linear interpolation to represent benefits and costs in the intervening 

years.60

Further Caveats

 In order for comparisons or aggregation to be meaningful, benefit and cost estimates 

should correctly account for all substantial effects of regulatory actions, including potentially 

offsetting effects, which may or may not be reflected in the available data. We have not made 

any changes to agency monetized estimates. To the extent that agencies have adopted different 

monetized values for effects—for example, different values for a statistical life or different 

discounting methods—these differences remain embedded in the tables. Any comparison or 

aggregation across rules should also consider a number of factors which our presentation does 

not address. For example, these analyses may adopt different baselines in terms of the 

regulations and controls already in place. In addition, the analyses for these rules may well treat 

uncertainty in different ways. In some cases, agencies may have developed alternative estimates 

reflecting upper- and lower-bound estimates. In other cases, the agencies may offer a midpoint 

estimate of benefits and costs. In still other cases the agency estimates may reflect only upperbound estimates of the likely benefits and costs. While we have relied in many instances on 

agency practices in monetizing costs and benefits, our citation of or reliance on agency data in 

this report should not be taken as an OIRA endorsement of all of the varied methodologies used 

to derive benefit and cost estimates.

60In other words, if hypothetically we had costs of $200 million in 2000 and $400 million in 2020, we would assume 

costs would be $250 million in 2005, $300 million in 2010, and so forth. For example, for the Regional Haze rule, 

EPA provided only an estimate of benefits and costs in 2015. To develop benefit and cost streams, we used a linear 

extrapolation of benefits and costs beginning in 2009 and scaling up to the reported 2015 estimates.
116 

 

APPENDIX F. THE “REGULATORY RIGHT-TO-KNOW ACT”61 

SEC. 624. (a) IN GENERAL.CFor calendar year 2002 and each year thereafter, the 

Director of the Office of Management and Budget shall prepare and submit to Congress, with the 

budget submitted under section 1105 of title 31, United States Code, an accounting statement 

and associated report containingC 

(1) an estimate of the total annual costs and benefits (including quantifiable and 

nonquantifiable effects) of Federal rules and paperwork, to the extent feasibleC

(A) in the aggregate; 

(B) by agency and agency program; and 

(C) by major rule; 

(2) an analysis of impacts of Federal regulation on State, local, and tribal 

 government, small business, wages, and economic growth; and 

(3) recommendations for reform. 

(b) NOTICE.CThe Director of the Office of Management and Budget shall provide public 

notice and an opportunity to comment on the statement and report under subsection (a) before 

the statement and report are submitted to Congress. 

(c) GUIDELINES.CTo implement this section, the Director of the Office of Management 

and Budget shall issue guidelines to agencies to standardizeC

(1) measures of costs and benefits; and 

(2) the format of accounting statements. 

(d) PEER REVIEW.CThe Director of the Office of Management and Budget shall provide 

for independent and external peer review of the guidelines and each accounting statement and 

associated report under this section. Such peer review shall not be subject to the Federal 

Advisory Committee Act (5 U.S.C. App.). 

61

Section 624 of the Treasury and General Government Appropriations Act, 2001, 31 U.S.C. ' 1105 note, Pub. L. 

106-554, '1(a)(3) [Title VI, ' 624], Dec. 21, 2000, 114 Stat. 2763, 2763A-161. 
117 

PART 2: Seventh Annual Report to Congress on Agency Compliance with the 

Unfunded Mandates Reform Act of 1995 

CHAPTER I: BACKGROUND

This report represents OMB’s sixth annual submission to Congress on agency 

compliance with the Unfunded Mandates Reform Act of 1995. It details agency actions to 

involve State, local, and tribal governments in regulatory decisions that affect them, including 

expanded efforts to involve them in agency decision-making processes. 

 In last year’s report to Congress on the benefits and costs of Federal regulations entitled, 

“Making Sense of Regulation,” OMB also included the annual report on agency compliance with 

the Unfunded Mandates Reform Act (the Act). This was done because the two reports together 

address many of the same issues and both highlight the need for regulating in a responsible 

manner that accounts for the costs and benefits of rules and takes into consideration the interests 

of our intergovernmental partners. As OMB stated in last year’s report, we intend to continue to 

publish these two reports together. This report on agency compliance with the Act covers the 

period between May and October of 2001 (rules published before May 2001 were described in 

last year’s report.) Next year’s report will encompass those rules and consultation activities 

undertaken from October of 2001 through September of 2002, which will correspond with the 

period covered by the cost-benefit report. 

Although this year’s report only covers a period of five months, the scope of consultation 

activities undertaken by Federal agencies such as Agriculture and Justice demonstrate this 

Administration’s commitment to building strong relationships with our intergovernmental 

partners based upon the constitutional principles of federalism embodied in Title II of the Act. 

Even in the early stages of the new Administration, federal agencies were actively consulting 

with States, localities, and tribal governments in order to ensure that regulatory activities were 

conducted consistent with the requirements of the Act. Furthermore, next year’s report will 

show an increased level of engagement, as several agencies have begun major consultation 

initiatives. Housing and Urban Development is working to increase State and local participation 

in a variety of community development projects, and Education has begun major consultation 

initiatives to implement the No Child Left Behind Act (NCLBA). For example, the NCLBA, 

which reauthorized the Elementary and Secondary Education Act and incorporated the major 

education reforms proposed by President Bush in his No Child Left Behind initiative, focused on 

accountability and school improvement. To implement NCLBA, Education established a 

negotiated rulemaking process that included the participation of individuals representing parents, 

students and educators. The result was the development of regulations implementing NCLBA’s 

provisions on academic standards and accountability. Negotiated rulemaking efforts are 

expected to continue, as other portions of NCLBA are implemented. 

 Reflecting the Bush Administration’s concern that many of our intergovernmental 

partners were not being consulted sufficiently on those issues that matter the most to them, OMB 

sought public comment in this year’s draft report to Congress on the benefits and costs of Federal 
118 

regulation from State, local, and tribal governments as to what they perceived as failures in the 

consultation process. OMB received no public comments in response to this request. However, 

the Administration continues to seek the views of our intergovernmental partners, as their input 

will be invaluable as we continue to develop policies to further the rights of State, local, and 

tribal governments under the Act. 

State and local governments have a vital constitutional responsibility to provide 

government services. They have the major role in providing domestic public services, such as 

public education, law enforcement, road building and maintenance, water supply, and sewage 

treatment. The Federal government contributes to that role by promoting a healthy economy and 

by providing grants, loans, and tax subsidies to State and local governments. However, over the 

past two decades, State, local, and tribal governments increasingly have expressed deep-felt 

concerns about the difficulty of complying with Federal mandates without additional Federal 

resources. In response, Congress passed the Unfunded Mandates Reform Act of 1995 (the Act). 

Title I of the Act focuses on the Legislative Branch, addressing the processes Congress 

should follow before enactment of any statutory unfunded mandates. Title II addresses the 

Executive Branch. To a large extent, Title II codifies the provisions of Executive Order 12875 

on the development of rules and regulations. It begins with a general directive for agencies to 

assess, unless otherwise prohibited by law, the effects of their rules on the other levels of 

government and on the private sector (Section 201). Title II also describes specific analyses and 

consultations that agencies must undertake for rules that may result in expenditures of over $100 

million in any year by State, local, and tribal governments in the aggregate, or by the private 

sector. Specifically, Section 202 requires an agency to prepare a written statement for 

intergovernmental mandates that describes in detail the required analyses and consultations on 

the unfunded mandate. Section 205 requires that for all rules subject to Section 202, agencies 

must identify and consider a reasonable number of regulatory alternatives, and then generally 

select from among them the least costly, most cost-effective, or least burdensome option that 

achieves the objectives of the rule. Exceptions require the agency head to explain in the final 

rule why such a selection was not made or why such a selection would be inconsistent with law. 

Title II requires agencies to “develop an effective process” for obtaining “meaningful and 

timely input” from State, local and tribal governments in developing rules that contain significant 

intergovernmental mandates (Section 204). Title II also singles out small governments for 

particular attention (Section 203). OMB’s guidelines assist Federal agencies in complying with 

the Act and are based upon the following general principles: 
119 

• intergovernmental consultations should take place as early as possible, beginning before 

issuance of a proposed rule and continuing through the final rule stage, and be integrated 

explicitly into the rulemaking process;

• agencies should consult with a wide variety of State, local, and tribal officials;

• agencies should estimate direct costs and benefits to assist with these consultations;

• the scope of consultation should reflect the cost and significance of the mandate being 

considered;

• effective consultation requires trust and significant and sustained attention so that all who 

participate can enjoy frank discussion and focus on key priorities; and 

• agencies should seek out State, local, and tribal views on costs, benefits, risks, and 

alternative methods of compliance, and whether the Federal rule will harmonize with and 

not duplicate similar laws in other levels of government. 

Sections 206 and 208 of the Act direct OMB to send copies of required agency analyses 

to Congressional Budget Office (CBO), and to submit an annual report to Congress on agency 

compliance with Title II. Section 207 calls for the establishment of pilot programs for providing 

greater flexibility to small governments. 

 The remainder of the report discusses the results of agency actions in response to the Act 

between May and October of 2001. Since not all agencies take many significant actions that 

affect other levels of government, this report focuses on the agencies that have regular and 

substantive interactions on regulatory matters that involve States, localities, and tribes, as well as 

the private sector. Chapter 2 discusses agency consultation efforts. These include both those 

efforts required under the Act and the many actions conducted by agencies above and beyond 

these requirements, consistent with the spirit of the Act. Chapter 3 lists and briefly discusses the 

regulations meeting Title II’s $100 million threshold and the specific requirements of Sections 

202 and 205 of the Act. Four rules have met this threshold – none were intergovernmental 

mandates. 
120 

CHAPTER II: AGENCY CONSULTATION ACTIVITIES 

 Sections 203 and 204 of the Act require agencies to seek input from State, local and tribal 

governments on new Federal regulations imposing significant intergovernmental mandates. This 

chapter summarizes consultation activities by agencies whose actions significantly affect State, 

local and tribal governments. 

 Ten agencies (the Departments of Agriculture, Commerce, Health and Human Services, 

Housing and Urban Development, Interior, Justice, Labor, Transportation, the Environmental 

Protection Agency, and the Social Security Administration) have involved State, local and tribal 

governments not only in their regulatory processes, but also in their program planning and 

implementation phases. These agencies have worked to enhance the regulatory environment by 

improving the way in which the Federal government relates to its intergovernmental partners. In 

general, the Departments not listed here (e.g., State, Defense) do not often impose mandates 

upon States, localities or tribes and so have fewer occasions to consult with other levels of 

domestic government. 

 As the following descriptions indicate, Federal agencies are generally complying with 

both the letter and spirit of the Act by conducting a wide range of consultations. Agency 

consultations sometimes involve multiple levels of government, depending on the agency’s 

understanding of the scope and impact of the rule. OMB continues to work with agencies to 

ensure that consultation occurs with the appropriate level of government. 

DEPARTMENT OF AGRICULTURE 

AGRICULTURAL MARKETING SERVICE (AMS) 

Federal Pesticide Recordkeeping Program 

Since the implementation of the Federal Pesticide Recordkeeping Program in early 1993, 

the emphasis of the Program has been to work cooperatively with State designated agencies 

dealing with pesticide regulatory programs to administer the Program. AMS recognizes 22 

States as having authority to enforce State regulations that are comparable to the Federal 

regulations. AMS provides funding and technical support to many of these States to assure the 

State’s Program and Federal Program mirror each other. 

For those States under the Federal Program, AMS enforcement comes by way of 

cooperative agreements with the State designated agencies. The State agency and AMS 

personnel work closely together to assure that the administration of the Federal Program 

complements the State’s Program. 

On July 11-12, 2001, an annual meeting took place with State and Federal personnel to 

discuss issues and administration of the Federal and State programs. State representatives 

voiced their support for the Federal Program and with the way it is being administered. These 
121 

annual meetings provide a forum for open and frank discussion and are an opportunity to 

coordinate State and Federal work and educational programs for the upcoming year. 

ANIMAL PLANT HEALTH INSPECTION SERVICE (APHIS) 

APHIS has made vigorous efforts to consult State, local, and tribal governments on 

regulatory issues affecting these levels of government. Following are examples of APHIS 

consultation activities: 

The Animal Health Safeguarding Review 

 In November 2000, APHIS established a cooperative agreement with the National 

Association of State Departments of Agriculture Research Foundation (NASDARF) to 

coordinate an assessment of the capabilities of U.S. and State governments, foreign governments, 

and the livestock industry to protect U.S. livestock and human health from animal diseases. A 

key part of the assessment was the performance of APHIS. The report’s authors included State 

veterinarians, university and private animal health specialists, former APHIS associates, and 

experts from State departments of agriculture and the livestock industry. Over the course of 8 

months, committee members traveled to U.S. program sites, met with participants in animal 

disease control programs, and drafted findings and recommendations that were later endorsed 

in a survey of stakeholders and personnel from State departments of agriculture. In October 

2001, NASDARF issued “The Animal Health Safeguarding Review, Results and 

Recommendations.” Groups to implement the recommendations are now being formed. These 

implementation groups will include, among others, APHIS and State representatives. 

Federal Noxious Weeds Program 

 APHIS is considering significant changes in policy and actions pertaining to noxious 

weeds. On January 28, 2002, APHIS published a document in the Federal Register soliciting 

public comment on a new draft action plan for the Noxious Weeds Program. This document 

reflects current thinking on the changes necessary to improve the design and conduct of the 

program. It is based on comments received in response to a March 2000 advance notice 

of proposed rulemaking (ANPR), including comments from State departments of agriculture, 

and subsequent consultations with the National Plant Board (an organization of the plant 

regulatory agencies of each of the States and the Commonwealth of Puerto Rico). It 

incorporates many of the weed-related recommendations from the July 1999 Safeguarding 

Review of American Plant Resource, which was conducted by the National Plant Board. Those 

recommendations were based on suggestions from State and local governments and industry. 

APHIS issued its first noxious weed policy in 1993 and implemented weed program strategies 

to the extent possible under authority of the Federal Noxious Weed Act of 1974, which has now 

been superseded by the Plant Protection Act (PPA) of 2000. The PPA consolidates most of 

APHIS' statutory authorities, significantly broadens the definition of “noxious weed,” and 

otherwise enhances the Agency's ability to address noxious weed problems. 
122 

Chronic Wasting Disease (CWD) 

 USDA is developing a program to eliminate CWD from farmed elk with State and industry 

support. On September 27, 2001, USDA announced the authorization of $2.6 million from the 

Commodity Credit Corporation to implement a farmed elk CWD surveillance and indemnity 

program. While considered rare, the disease has been diagnosed in farmed elk herds in 6 

States and identified in free-ranging deer and elk in a limited area of northeastern Colorado, 

southeastern Wyoming, and the southwestern corner of Nebraska. CWD is classified as a 

transmissible spongiform encephalopathy (TSE), a group of progressive neurological diseases 

that includes scrapie and bovine spongiform encephalopathy. On February 8, 2002, APHIS 

published an interim rule to provide indemnity for infected and exposed herds destroyed 

because of CWD. APHIS plans to implement a herd certification program by 2003. In 

developing these programs, APHIS has consulted affected States and representatives from 

industry on the issues of compensation, surveillance, testing, and carcass disposal. APHIS 

expects to receive additional comments on the interim rule in 2002. 

Bovine Tuberculosis Eradication Program 

 

In the past year, APHIS has worked closely with States in which bovine tuberculosis 

exists. The goal is to increase the control of and accelerate eradication of the disease in the 

United States, while relieving unnecessary restrictions on the States. APHIS has consulted with 

the State of Michigan to develop guidelines that would be used to recognize two separate 

tuberculosis classification zones in the State. This would relieve unnecessary restrictions on 

that part of Michigan that does not present a high risk of tuberculosis. Additionally, APHIS 

worked closely with the State of Texas while developing an interim rule that will create a 

tuberculosis “buffer zone” through payment to owners of dairy cattle in the El Paso, TX, area for 

the destruction of their cattle and cessation of their dairy operations. 

Foot-and-Mouth Disease 

Following outbreaks of FMD in February 2001 in Great Britain and several countries in 

Europe, APHIS engaged in a number of activities to strengthen exclusion efforts and to ensure 

that adequate plans were in place to promptly eradicate the disease if it did occur here despite 

those efforts. These activities included extensive consultations with State, local, and tribal 

governments. For example, an FMD Awareness Workshop was held in Riverdale, MD, on 

March 29 and 30, 2001, for State agriculture commissioners, State veterinarians, and industry 

for California, at the request of Secretary Veneman. In April, approximately 45 Native 

American tribal leaders and representatives met in Riverdale, MD, for a briefing on FMD 

exclusion, outreach and public affairs efforts. During the height of the outbreaks in Great 

Britain, APHIS manned a toll-free telephone line from the agency’s emergency operations center 

and held weekly conference calls connecting State agriculture commissioners, State 

veterinarians, and APHIS area veterinarians in charge and APHIS plant health directors. 

Throughout this process, APHIS received a number of informal comments which helped to shape 
123 

a proposed rule on compensation for animals destroyed in the event that FMD occurred in the 

United States. 

Ongoing Consultations Regarding Plant Health 

APHIS’ Plant Protection and Quarantine (PPQ) program carries out numerous activities 

to detect and contain, and in some cases, to manage or eradicate plant pests damaging to 

agricultural and environmental resources of the United States. These programs are conducted 

cooperatively with State agencies, which share the costs with APHIS. Operational plans are 

prepared jointly and reflect the respective roles of State and Federal partners. APHIS consults 

regularly and frequently (sometimes on a daily basis during the active growing season) on 

program strategies, methods, operations, and progress. PPQ cultivates consultations with 

State agencies through National Plant Board meetings, task forces, and special committees to 

resolve issues of mutual concern. Specific examples of such consultations during January - 

October 2001 that have resulted in, or are expected to result in, regulatory changes include: 

consultations with State officials in California and Oregon, and with members of the National 

Plant Board related to the development of new regulations to prevent the spread of Phytopthera 

ramorum, a disease of oak and other plant species; and consultations with State officials in 

Texas and other southwestern States related to Karnal bunt compensation and interstate 

movement regulations. Based on those consultations, APHIS published an interim rule related 

to Phytopthera ramorum in the Federal Register on February 14, 2002. 

Ongoing Consultations with Tribal Governments 

APHIS is very active in consulting with Native American Tribes. Examples include 

regularly notifying tribes through tribal list servers of all APHIS documents published in the 

Federal Register; participating in national meetings, including the Intertribal Agriculture 

Council, Native American Fish and Wildlife Society, and the National Congress of American 

Indians (NCAI); and participating in monthly meetings with NCAI. Among those topics 

discussed with tribes this past year were the need for Tribal Codes and emergency response plans 

for animal and plant health emergencies; issues related to bison in Yellowstone National Park; 

and compliance with section 18 of the Federal Insecticide, Fungicide, and Rodenticide Act. 

FOOD AND NUTRITION SERVICE (FNS) 

Summer Food Service Program (SFSP) Outreach Initiative

In September 2001, FNS convened a meeting of staff from the 14 State agencies 

authorized under the National School Lunch Act to operate a three-year pilot project which could 

lead to implementation of more streamlined accounting requirements for school and other public 

sponsors of SFSP that would bring SFSP requirements more in line with those of the School 

Lunch Program. Representatives from the Food Research and Action Center, America's Second 

Harvest, and the American School Food Service Association also attended. The result of the 
124 

meeting was collaboration on ways to promote the pilot project for eligible sponsors, to increase 

participation, and to identify needed technical assistance materials. 

National Child and Adult Care Food Program State Director’s Meeting

In March 2002, FNS staff participated in this biennial conference which focuses on 

current issues and new policies which affect State agencies and CACFP institutions. Staff 

presented sessions on the CACFP Management Improvement Initiative, afterschool snacks and 

suppers for nutritionally needy children, emergency homeless shelters, and adult day care.

National School Lunch Program Simplification of the Free and Reduced Price Application 

Over the years, State and local school food service cooperators have recommended 

changes in the application for the National School Lunch Program’s free and reduced price 

meals. FNS is working on the development of a new free and reduced price application which 

will be more user friendly while eliciting more accurate income information. FNS has been 

working very closely with State and local school food service personnel to obtain and implement 

their suggestions for improvement of the application. This consultation is expected to result in 

an improved application which will be released in 2002. 

Special Supplemental Nutrition Program for Women, Infants & Children Directors 

Partnership 

FNS updated WIC Policy Memorandum 98-9, Nutrition Risk Criteria, in March 2001. 

The update was developed through deliberation by and consultation with the Risk Identification 

Selection Collaborative, a Federal/State partnership established to achieve consistency in the 

nutrition risk criteria used to determine WIC Program eligibility. 

The WIC Management Information Systems (MIS) Functional Requirements Document 

(FRED) is still under development and will be issued to all WIC State agencies in FY 2002. A 

Program Integrity and Technology conference, jointly sponsored by FNS and the National 

Association of WIC Directors (NAWD) was held in December 2001. FNS is coordinating with 

NAWD to co-sponsor a meeting in 2002 of the NAWD Electronic Benefit Transfer/Electronic 

Service Delivery Users Group, which is comprised of State representatives working on electronic 

benefit transfer/service delivery system plans and projects. 

In conjunction with representatives of NAWD, FNS issued in December 2001 a 

document entitled WIC Nutrition Services Standards, developed to improve the quality of 

nutrition services provided to WIC participants. 

 As part of the WIC WORKS Resource System, FNS conducts biannual mailings to State 

WIC agencies of materials that have been contributed to this online database which is 

dedicated to providing nutrition service tools for health and nutrition professionals. 

 
125 

WIC staff attend and participate as requested in the annual NAWD conferences; WIC 

also participated in the National Indian and Native American WIC Directors’ Conference in the 

fall of 2001. 

WIC and NAWD, in conjunction with the Centers for Disease Control and Prevention 

and six other partner organizations, worked on a WIC-Immunization Action Plan. The Plan was 

completed in July 2001. The purpose of the plan is to facilitate a national strategy to improve 

the immunization rates of children served by WIC while maintaining and protecting the WIC 

Program’s core mission of providing effective nutrition services. 

Commodity Supplemental Food Program Plain Language, Program Flexibility, and 

Accountability Rule 

FNS solicited input from State and local CSFP operators in developing a proposed rule to 

amend CSFP regulations in "plain language," to reduce time and paperwork burdens for State 

and local agencies, increase flexibility in program operations, and strengthen program 

accountability. The rule will be published for public comment this year. 

Food Distribution Program on Indian Reservations Food Package Review 

In consultation with the National Association of Food Distribution Programs on Indian 

Reservations, FNS has instituted a process for the annual review of the FDPIR food package. 

A work group, comprised of tribally appointed FDPIR Program Directors, experts in the area of 

American Indian health and nutrition, USDA commodity procurement specialists, and FNS staff, 

has been convened to review proposed food package changes and make recommendations to 

FNS officials. The FY 2002 review team is expected to make its recommendations to FNS this 

summer. 

Multi-Program Activities - Other Outreach 

Outreach activities also include holding regular coordination meetings between program 

staff and the parties most concerned with implementing the provisions of food program related 

rules. Such meetings involve: Food Stamp Program Directors and State officials; regional 

Electronic Benefit Transfer coordinators and State contacts; FNS personnel and State WIC 

agency directors and their vendors; and FNS and State Child Nutrition Program directors. 

 A continuing liaison with State, local, and tribal program operators is maintained through 

their national organizations such as the American Public Welfare Association, National 

Governor’s Association, the Child and Adult Care Food Program Sponsors Forum, the Child and 

Adult Care Sponsors Organization, the American Commodity Distribution Association, the 

National Association of Food Distribution Programs on Indian Reservations, and the National 

Commodity Supplemental Food Program Association. 
126 

FNS consulted with the National Association of Food Distribution Programs on Indian 

Reservations and its members on the development of an outreach poster for FDPIR. Program 

recipients participated in a photographic shoot for the poster, which was held at a FDPIR 

distributing agency in Miami, Oklahoma. 

NATIONAL RURAL DEVELOPMENT PARTNERSHIP (NRDP) 

The National Rural Development Partnership (NRDP) and State Rural Development 

Councils (SRDCs) were established in 1990 as part of the Presidential Initiative on Rural 

America to facilitate greater coordination of rural development policies and programs. As it 

enters its second decade, the NRDP continues to play a significant role in USDA outreach to 

State, local and tribal governments. There are currently 40 SRDCS. SRDCs are independent 

organizations that bring together Federal, State, local, and tribal governments with the private 

and non-profit sectors to identify rural communities' needs and build collaborative, coordinated 

responses and solutions. 

 The NRDP addresses a broad range of issues (e.g., transportation, health care, veterans' 

affairs, economic development, telecommunications and housing) that impact State, local and 

tribal governments. USDA and other Federal departments continue to use this capacity to 

improve the delivery of services to rural areas. The ultimate goal of the NRDP is to assist people 

in rural communities improve their quality of life. Examples are as follows: 

In April 2001, the Wyoming Rural Development Council (WRDC) co-sponsored, with 

the Governor, the Eastern Shoshone Tribe, the Northern Arapaho Tribe, and the Wyoming 

Business Council, a three-day workshop entitled "Developing Effective Working Relationships 

with Indian Tribes and Organizations." The workshop provided 75 Federal, State, and local 

government officials and business leaders the knowledge necessary to develop and conduct 

effective working relationships with Indian Tribes and organizations. Governor Jim Geringer and 

the Tribal Chairs delivered keynote addresses. Various tribal members shared information with 

participants to give them a deeper understanding of Indian culture and practices. The Wyoming 

Business Council provided financial support and participated in the workshop. As a result of 

Wyoming's success, the Utah and Montana Councils are planning to hold similar workshops. 

 The Kansas Rural Development Council (KRDC) is effectively supporting the Rural 

Transportation Project undertaken to slow the rate of rail abandonment in Kansas and create a 

policy to help the State and its affected counties address problems arising from the loss of rail 

service to rural communities. KRDC organized public hearings and stakeholder meetings, 

worked with short-line railroad companies, kept State and Federal legislators informed of project 

progress, and developed rapport with the National Surface Transportation Board. The Council 

also designed and built the case for funding a rural transportation study and plan, pursued project 

funding, and developed a research proposal used to study rural transportation problems. KRDC's 

work produced tangible results: 920 of 1,000 miles of endangered track have been saved and the 

Kansas Department of Transportation has granted $150,000 for a rural transportation study to be 

completed in August 2002. 
127 

The North Dakota Rural Development Council (NDRDC), responding to a request from 

the Minneapolis Federal Reserve Bank, organized a workshop dedicated to a review of Indian 

Reservation lending from the standpoint of tribal sovereignty. The United Tribes Technical 

College, acting on behalf of their five Tribal Governments, hosted the first session on their 

Bismarck campus. There is an existing perception among lending organizations that tribal 

sovereignty is an inhibiting factor in the security of loans and the recuperation of debt. The goals 

of the workshop were to improve understanding of regulations governing tribal lending, open the 

doors of communication between the tribes and lending institutions, and ultimately improve 

mutual borrowing and lending access for tribal members and the financial community. As a 

result of the workshop, an Interagency Working Group on Reservation Lending was established 

in 2001. The Spirit Lake Sioux Nation of North Dakota agreed to pilot a focus project on their 

reservation, with emphasis on developing a uniform commercial code for the Tribe. The Money 

Smart program, a basic finance education program, will be offered to tribal housing authorities at 

all five North Dakota Reservations. The goal of the pilot project is to develop best practices that 

can apply in other States, Tribal governments, and lending institutions. 

 

The National Rural Development Council (NRDC) is another component of the NRDP. 

The NRDC consists of senior program managers representing Federal departments, agencies, and 

national organizations. It provides exchanges of information and coordination across Federal 

agencies on issues affecting rural communities. It works on behalf of SRDCs at the national 

level. It raises awareness of the impact of Federal programs, and their rules and regulations, on 

rural areas. For instance, recently the NRDC hosted a presentation by OMB on the many 

definitions of rural used in Federal programs, and the resulting problems. 

The NRDP has several task forces. One of these is the Health Care Task Force, which 

has worked closely with HHS on rural health care issues, including increasing the Medicare 

reimbursement rates for most ambulance services in rural areas. This Task Force also helped 

facilitate rural communities' responsiveness to the HHS Rural Initiative that Secretary Thompson 

announced at the July 2001 Joint NRDP - Community Development Society Conference. 

The NRDP, through the NRDC, has established an impediments committee and process, 

which SRDCs can access to ameliorate Federal barriers that significantly hinder successful 

implementation of Federal programs in rural areas. The NRDC has reached out to tribal 

organizations to raise awareness of tribal issues and increase Tribal participation at both the 

National and State levels. For instance, in 2000-2001 the Chair of the NRDC was the 

representative from the National Congress of American Indians. 

DEPARTMENT OF COMMERCE 

It is the Department’s policy to consult with State, Local and Tribal governments 

concerning actions of the Department which might impact its intergovernmental partners. For 

instance, the National Marine Fisheries Service (NMFS) consults with representatives of State, 

Local and Tribal governments in the management of marine fisheries. NMFS consults 
128 

extensively with its State managing partners (from Maine through North Carolina) to ensure that 

conservation goals for Summer Flounder are met while minimizing confusion for fishermen. 

Summer flounder migrate up and down the East coast throughout the year, and whether they are 

found in State or Federal waters is largely influenced by the shape of the continental shelf and 

the season. In several States, summer flounder occur predominantly in State waters (i.e., within 

three miles from shore) during the spring of the year. During the later part of the year, they are 

more abundant farther offshore in Federal waters. Thus it is critically necessary for the Atlantic 

coastal States and the Federal government to coordinate management of summer flounder. 

The summer flounder fishery is cooperatively managed by the Mid-Atlantic Fishery 

Management Council (Council),and the Atlantic States Marine Fisheries Commission (ASMFC), 

and NMFS. The Council has voting members from State fishery management agencies from 

New York, New Jersey, Delaware, Pennsylvania, Maryland, Virginia, and North Carolina; the 

ASMFC has voting members from State fishery management agencies from each of the coastal 

States from Maine through Florida. 

In 2001, NMFS was under court order to achieve a certain level of Total Allowable 

Landings (TAL) that was lower than the TAL allowed by the ASMFC’s interstate Fishery 

Management Plan (FMP). Initially, the Council recommended, and NMFS implemented, a 

Federal TAL of 17.91 million lbs, which was significantly lower than that set for State waters by 

the ASMFC (20.5 million lbs). This difference would have resulted in inconsistent commercial 

quotas, and inconsistent recreational harvest limits. 

To resolve this inconsistency, NMFS planned a series of facilitated stakeholder meetings 

with interests representing State governments, commercial fishermen, recreational fishermen, 

and NGOs, including ASMFC. The goals of the first meeting were: to discuss the causes of the 

2001 inconsistency; to try to reach agreement on consistent management measures for the 2001 

fishery; and to discuss methods for preventing such inconsistencies in the future. 

The initial facilitated meeting generated support for continuing discussions among 

interested parties. Such discussions included a special session in Baltimore in which the NMFS 

Assistant Administrator for Fisheries met with the State directors and the ASMFC. As a direct 

result of those consultations, NMFS and other interested parties were able to agree upon a TAL 

which best accommodated the needs of the States, the fishery and other interested stakeholders. 

DEPARTMENT OF HEALTH AND HUMAN SERVICES 

HHS’s Office of Intergovernmental Affairs (IGA) assists the Secretary in the 

development and implementation of the Department’s longstanding intergovernmental 

consultation policies by ensuring that the Department diligently considers and incorporates the 

perspectives of State, local and tribal governments on emerging policy issues. 

The chief tool used to accomplish this objective is the intergovernmental consultation 

process, in which the leadership of every agency and staff office of the Department plays a role. 
129 

IGA further uses the consultation process in its role as an intermediary between individual State, 

local and tribal governments and the Department. IGA is also responsible for ensuring that the 

rural perspective is included in Departmental policy, program and regulations and the Office 

oversees the HHS role in an interdepartmental effort on the coordination of community 

transportation resources and services. 

Consultation with Tribes

 The IGA houses the Departmental Tribal Consultation Unit and facilitates consultations 

for Tribes and Tribal organizations across the Department. In April 2001the Secretary hosted a 

meeting with tribal leaders of the major national tribal organizations to confirm tribal 

consultation and the HHS-wide tribal budget consultation sessions will continue. The third 

annual tribal budget consultation session for the FY 2003 budget was held in June 2001. 

 In August 2001, the Secretary traveled to tribal reservations of the Sault Saint Marie 

Tribe (MI), Lac Du Flambeau Tribe (WI), Red Cliff Band of Chippewa Indians (WI), and the 

Oglala Sioux Tribe (SD) to meet directly with elected tribal officials, discussing tribal priorities 

and needs, meeting with tribal community members, and touring tribal reservation facilities. 

Also in August, the Deputy Secretary visited the Chippewa Cree Tribe of Rocky Boy’s 

Reservation and the Confederated Salish and Kootenai Tribes of the Flathead Nation in Montana. 

 Additional tribal consultations were organized on oral health needs and resources, the 

reauthorization of the Temporary Assistance for Needy Families program, the impact of gaming 

issues on health and human services, and the identification of funding sources. IGA also 

facilitated a policy briefing for the National Women Legislative Leaders Day held in 

Washington, DC. It was the first effort to include women tribal legislative leaders. 

 IGA participated on the Indian Health Service Title V Federal Core Team and Negotiated 

Rulemaking Committee and ASPE Title VI Tribal Self-Governance Feasibility Study. Both of 

these efforts entailed complex and sustained consultation and negotiation with tribal leaders. 

Regional Consultations

The IGA also facilitates consultation through the work of the 10 HHS Regional Offices. 

Regional staff convened a series of conferences in cities throughout the region as part of an effort 

to reach adults who work with teens. Working in partnership with the U.S. Department of 

Education, HHS consulted with the State health department and local partners to tailor each 

conference to address health issues such as teenage pregnancy, substance abuse and violence and 

to look at ways to build strong partnerships in the community that would promote the health and 

well being of teens. 

 Regional staff planned an ongoing series of domestic violence conferences. These 

conferences were tailored to the expressed needs of the State, following consultation with State 

officials in the State's department of health and any other related departments. 
130 

 Regional staff conducted four training/consulting on the Surgeon General's health 

initiatives resulting in timely approval of Healthy People 2010 plans. Additional assistance was 

provided to help develop access to health and dental care for Native Americans, with a focus on 

developing a culturally sensitive telemedicine program to provide traditional tribal medicine. 

Since 9-11, the Regional staff has been promoting emergency preparedness through 

consultations with local jurisdictions and emergency management coordinators to develop 

emergency plans based on the New York City model. 

CENTERS FOR MEDICARE AND MEDICAID SERVICES 

CMS has worked closely with States to expedite the review process for Medicaid State 

plan amendments (SPAs) and has resolved the backlog of pending SPAs. Since January 2001, 

over 1,500 SPAs and waivers have been approved, including 346 SPAs that were part of the 

backlog. These SPAs and waivers have provided health care coverage to almost 1.8 million 

people and additional services to over 4.5 million people. 

As another step to strengthen and improve the Medicaid and State Children’s Health 

Insurance programs, CMS has instituted a Health Insurance Flexibility and Accountability 

Initiative (HIFA) to make it faster and easier for States to expand access to health care coverage 

for low-income individuals through the Medicaid program’s section 1115 demonstration 

authority. This approach will permit States to expand insurance coverage through innovative 

approaches, including health insurance options available in the private sector. Two States have 

approved HIFA waivers, California and Arizona, and two other HIFA waivers are pending. 

CMS is also discussing HIFA programs with a number of other States and we expect to receive 

additional applications in the near future. 

CMS is also working with States on model waiver programs related to prescription drugs, 

as is outlined in the President’s budget. CMS recently approved a demonstration program in 

Illinois that will give an estimated 368,00 low-income seniors prescription drug coverage 

through the Medicaid program. 

Thirty-six States have approved Breast and Cervical Cancer Prevention and Treatment 

SPAs. This is a new option for States, and it allows States to cover health care needs of a new 

categorically needy group of uninsured women who require treatment for breast or cervical 

cancer. Currently one State has a SPA pending, and 13 States still have the option to implement 

this new option. 

In FY 2001, HHS was able to award $70 million in grants to 38 States and territories. 

These grants helped States design and implement effective and enduring improvements in 

community long term support systems to enable children and adults of any age who have 

disabilities or long term illnesses to live and participate in their communities; supported States’ 

efforts to improve personal assistance services that are consumer-directed or offer maximum 
131 

individual control; and helped States transition eligible individuals from nursing facilities to the 

community. This year, Congress appropriated another $55 million for more System Change 

Grants. These grants will be used for another 54 grants in 40 States. 

FOOD AND DRUG ADMINISTRATION 

 The Food and Drug Administration participates in 169 Partnership Agreements with a 

State or group of States within a particular region to address various regulatory issues. These 

partnerships strengthen Federal-State relationships, and provide valuable information exchanges 

between FDA and States in solving public health problems. The following are good examples of 

these agreements: 

- Currently, FDA has partnership agreements with 26 States for the regulation of new x-ray 

assemblies or reassemblies. These partnerships include information sharing and cooperative 

inspection programs. 

 

- Florida, Mississippi, and Hawaii are partners with FDA in the Food Safety Task Force. This 

task force was established to foster communications and cooperation within State and local food 

safety regulatory agencies and to promote the integration of statewide food safety systems. 

 - FDA and the New York State Department of Agriculture and Markets have an agreement to 

share reference material and surveillance information about food products that do not comply 

with FDA and New York State statutes and regulations. This agreement is intended to promote 

cooperation and eliminate redundancies in surveillance programs. 

 - FDA and the Massachusetts Department of Public Health have an agreement to conduct joint 

surveillance of MA harvested seafood and produce for pesticide residue analysis. This 

agreement is intended to eliminate redundancies in sampling and improve cooperation of FDA’s 

and Massachusetts’ regulatory programs. 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

In calendar year 2001, HUD did not promulgate any rules that contain a Federal mandate 

that will result in an expenditure of $100 million or more in any one year by State, local or tribal 

governments. In calendar year 2001, the first year of the new Administration, HUD did not issue 

a significant number of rules. However, in many instances, HUD consulted regularly, as its 

practice, with State, local and tribal governments on HUD programs and program processes, 

seeking input on ways in which HUD can better serve and better partner with its program 

constituents. 

One of HUD’s more significant consultations in calendar year 2001, with contemplation 

of rulemaking in late 2002 or early 2003, involved consultation with HUD’s tribal partners. In 

late 2000, three laws were enacted that amended the Native American Housing Assistance and 

Self-Determination Act of 1996 (NAHASDA). NAHASDA reorganized the process of 
132 

providing housing assistance to Native Americans by replacing several separate assistance 

programs with a single block grant program. As required by NAHASDA, when enacted, HUD 

developed its regulations to implement this new program through negotiated rulemaking 

procedures. The three statutes that amended NAHASDA in late calendar year 2000 are the 

Fiscal Year 2001 HUD Appropriations Act (Pub.L.106-377, approved October 27, 2000); the 

Omnibus Indian Advancement Act (Pub.L. 106-568, approved December 27, 2000); and the 

American Homeownership and Economic Opportunity Act of 2000 (Pub.L 106-569, approved 

December 27, 2000). 

In February, March, and April 2001, HUD sponsored a series of regional meetings with 

Indian tribes to determine tribal priorities for changes to the NAHASDA regulations. These 

consultation sessions, which were not limited to discussion of the statutory changes, highlighted 

key concerns and programmatic issues from tribes from across the country. In July 2001, HUD 

sponsored its eighth Native American National Homeownership Summit. The theme of the 2001 

summit was "Working Together to Build Programs and Opportunities." During the Summit, 

ONAP and its tribal partners discussed the priority issues raised during the earlier regional 

consultation sessions, and the best methods for accomplishing the desired changes. 

 One result of these consultations was HUD's publication on April 18, 2001 (66 FR 

37098) of a Federal Register notice announcing its intent to establish a negotiated rulemaking 

committee for purposes of revising the NAHASDA block grant formula. In addition, HUD 

considered the comments received from the Indian tribes during these consultations in 

determining the best methods for implementing the statutory changes to NAHASDA. In 

November 2001, HUD provided tribal government leaders with an opportunity to review and 

provide feedback on a draft HUD notice outlining these proposed implementation methods. 

HUD took these comments into consideration before issuing its notice to the Indian tribes on the 

methods to be used for implementation of the NAHASDA statutory revisions. 

DEPARTMENT OF THE INTERIOR 

U.S. FISH AND WILDLIFE SERVICE 

Refuge Management Program

The refuge management policies collectively form a solid foundation to guide the most 

important aspects of modern refuge management. They represent the key steps to implement the 

National Wildlife Refuge System Improvement Act of 1997 and will help ensure that we 

administer national wildlife refuges consistently as a national network of lands, as called for in 

this Act. 

The US Fish and Wildlife Service (the Service) is fulfilling the spirit of the Act by 

involving its stakeholders during policy development. After passage of the Act, an important 

first step was to provide colleagues in State fish and wildlife agencies a meaningful role in policy 

development. The Service asked the International Association of Fish and Wildlife Agencies to 
133 

facilitate State involvement. During the past two North American Wildlife and Natural 

Resources Conferences, the Service met with State directors to share drafts and allow for input. 

As the Service has developed each policy, it has encouraged its partners, especially the States 

and the public, to provide input. Particular concerns were addressed in final policies. This 

outreach effort is a new way of doing business for the Service that has given an influx of 

expertise and ideas and ultimately is helping to develop better policies and stronger partner 

relationships.

Migratory Bird Hunting Regulations

In 2001, after consultation with Indian tribes, the Service published special migratory 

bird hunting regulations for the 2001– 02 hunting season for Indian tribes. The Service publishes 

special Indian tribe regulations in response to tribes’ requests for recognition of their reserved 

hunting rights and of some tribes’ authority to regulate hunting by reservation members. The 

guidelines accommodate the reserved hunting rights and management authority of Indian tribes 

while ensuring that migratory birds receive necessary protection. Coordination with the tribes 

has been highly effective. This program continues to grow as the Service and participating tribes 

cooperatively work to conserve this important international resource. 

Federal Aid

 Programs operated by the Service provide grants to the States for such purposes as 

restoring sport fish and wildlife, providing boating access to the public, providing hunter and 

aquatic education opportunities, implementing conservation projects for species, and acquiring 

land associated with habitat conservation plans. After the Service awards funds to a State, the 

State must implement funded actions in accordance with applicable guidelines. The Service has 

published several new Manual chapters dealing with the award of Federal grants to, and audits 

of, the States. State partners and others interested in Federal grants were brought in to review the 

draft chapters, and all of the chapters are clearer and more effective as a result of these 

interactions. 

National Wildlife Refuge System 

 In January 2001, the Service’s National Wildlife Refuge System published four proposed 

policies: National Wildlife Refuge System Mission, Goals, and Purposes; Wilderness 

Stewardship; Appropriate Refuge Uses; and Wildlife-Dependent Recreational Uses. We 

extended the public comment period to approximately 160 days to facilitate meetings and 

discussions with the States on the content of the draft policies. The comments received from 

State partners during the course of five meetings helped shape and improve the final policies and 

regulations that will govern the administration of the Refuge System. 
134 

Endangered Species Program

 

 In 2001 the Service published a rule to establish a migratory population of whooping 

cranes east of the Mississippi River between the States of Wisconsin and Florida. A team 

representing Federal and State governments and private organizations has been coordinating the 

project since 1998. A Cooperative Agreement exists between the Service and its partners—the 

International Crane Foundation, Operation Migration, the Wisconsin Department of Natural 

Resources, the U.S. Geological Survey–Patuxent Wildlife Research Center, and the Natural 

Resources Foundation of Wisconsin. 

 One of the world’s rarest birds, the whooping crane is a federally endangered species in 

the United States. By 1941, only 21 whooping cranes existed in North America. Currently, wild 

whooping cranes exist in three flocks, only one of which is migratory. The species is vulnerable 

to extinction; all or most of these birds could be killed from a single event such as a hurricane, 

disease outbreak, toxic spill, or prolonged drought. To ensure that the whooping crane survives, 

the International Whooping Crane Recovery Team recommended that an additional migratory 

flock be established. If successful, the current project will result in the establishment of a second 

migratory population of whooping cranes. 

 Coordination with the many stakeholders of this project has been highly effective. We 

received approval and support for the project from the Atlantic and Mississippi Flyway Councils 

(formal organizations that generally include one representative from each State and Province in 

the flyway) and the States adjacent to the migration route. Twenty States have had varying 

levels of involvement: in addition to the direct flyway States of Wisconsin, Illinois, Indiana, 

Kentucky, Tennessee, Georgia, and Florida, 13 other States adjacent to the flyway route are also 

partners in the project. 

MINERALS MANAGEMENT SERVICE 

Offshore Minerals Management Program 

 The Offshore Program manages the mineral resources on the Outer Continental Shelf in 

an environmentally sound and safe manner. The Outer Continental Shelf Policy Committee, 

which includes State members, helps us with our mission. In October 2001, this committee 

established a subcommittee on education and outreach to develop recommendations for an 

education and outreach program with the public. This will encourage a national dialogue on 

Outer Continental Shelf oil and gas development. 

 The International Activities and Marine Minerals Division has been working with nine 

States along the east and gulf coasts to identify sand resources in Federal waters that could be 

used for beach renourishment and wetlands protection projects. In addition, MMS has conducted 

environmental studies to examine the biological and physical oceanographic implications of 

using sand from Outer Continental Shelf sites. During 2001, we conveyed over 4.7 million cubic 

yards of sand for shore protection projects. 
135 

 Regional offices also contribute to our efforts to work with State, local and Tribal 

governments. For example, the Alaska Region is conducting an extensive outreach program 

associated with both pre-lease and post-lease activities of the Secretary’s 5-year Oil and Gas 

Leasing Program, including: 

- Government-to-government consultations with potentially affected federally recognized 

Indian Tribes; 

- Meetings with commercial fishing groups, environmental organizations, and local 

governments to obtain views on leasing, exploration, or development proposals; and 

- Public meetings held recently across the North Slope of Alaska and South Central 

Alaska to obtain input on Beaufort Sea and Cook Inlet sales. 

Minerals Revenue Management Program

 Our Minerals Revenue Management program (MRM) collects, verifies, and distributes 

mineral revenues from Federal and Indian lands. This program has been going through an 

extensive reengineering initiative for the past 3 years, encompassing its core business processes 

and automated support systems. MRM has consulted with its customers on every aspect of the 

reengineering effort. 

State and Tribal Royalty Audit Committee

 One means of consultation is the State and Tribal Royalty Audit Committee, comprised 

of State and Tribal audit managers who have cooperative audit agreements with MMS under the 

Federal Oil and Gas Royalty Management Act. The Committee meets at least quarterly, and 

subgroups of the committee may meet more often. This Committee has achieved results in a 

number of areas. 

- State and Tribal auditors from Colorado, North Dakota, and Oklahoma helped design 

various tools used in the new compliance system and will help train system users. 

 - New Mexico is working with MMS on electronic data acquisition from company 

databases that should reduce information collection time and burden. 

- Representatives from Colorado, Utah, Wyoming, and the Northern and Southern Ute 

Tribes helped design the compliance process for onshore oil and gas. 

- Representatives from Colorado, Utah, New Mexico, Wyoming, and the Navajo and 

Crow tribes helped design the new compliance and asset management process for solid 

minerals. MMS also consulted with industry on improvements to the compliance 

activities. 

Work with State and Tribal Auditors

MMS works on a continuing basis with State and tribal auditors to: 
136 

- Improve the language and content of orders sent to companies for royalty 

underpayment; 

- Resolve valuation issues for royalty purposes involving Federal leases in their State or 

Indian leases on their Indian reservations; 

- Develop case-specific valuation guidance for companies who request solid minerals 

valuation determinations; and 

 - Resolve complicated royalty disputes through negotiation. 

Consultations with Tribal Auditors

MMS consulted with tribal auditors on a number of Indian royalty issues, including: 

 - MMS Form 4410—Certification for not Performing Dual Accounting.

- Strategy for completing audits of gas production from Indian leases in Montana and 

North Dakota. 

- Enforcement actions involving major portion/index zone pricing and dual accounting 

aspects of the Indian Gas rule. 

 - Oil sales and marketing for production and sales on each reservation. 

 MMS is currently working to add new cooperative audit agreements with States and 

tribes. The Crow Tribe entered into a cooperative audit agreement with MMS in June 2001. We 

are currently in negotiations with Alaska for a Section 205 audit agreement for mineral royalties 

from Federal leases in Alaska. 

Royalty Policy Committee

 Another avenue of consultation is the Royalty Policy Committee (RPC). RPC provides 

policy advice representing the collective viewpoint of the States, Indians, mineral industry and 

other parties. This advice concerns performance of discretionary functions in the Department's 

management of Federal and Indian mineral leases and revenues. RPC reviews and comments on 

royalty management and other mineral-related policies and conveys the views of mineral lessees, 

operators, revenue payors, recipients, governmental agencies and the interested public. Some 

recent results from the RPC work include: 

 - State representatives worked together with MMS, Industry, and Interior Department 

Solicitor’s Office to draft rules on accounting and auditing relief and prepayment of royalties for 

marginal properties. 

 - The RPC Coal subcommittee worked with MRM on issues about coal waste piles, 

advance royalties, and alternative valuation methods. 

- Every six months MMS has meetings with tribal representatives in Montana to work out 

mineral royalty issues. 
137 

 MMS clarified the policies and procedures related to its Intergovernmental Personnel Act 

(IPA) Fellowship Program. The program develops audit and compliance experience, knowledge 

and skills for Fellows from the Tribes and States. It provides a way for MMS and Tribes or 

States to learn about each other’s functions and processes and helps improve understanding, 

communication, and cooperation between the parties. Four tribes have been involved in the IPA 

Fellowship Agreements: the Shoshone-Arapaho Tribes, the Crow Tribe, the Navajo Nation, and 

the Chippewa-Cree Tribe. 

OFFICE OF SURFACE MINING 

 There are 24 coal mining states that regulate surface coal mining and reclamation 

operations under the Surface Mining Control and Reclamation Act of 1977 (SMCRA). During 

the specified time period, OSM met regularly with individuals from State and local governments 

on issues that affected them. OSM also met with organizations representing elected State 

officials on a regular basis. 

State Regulatory Issues

On April 24, 2001, OSM's Acting Director attended and addressed the annual meeting of 

the Interstate Mining Compact Commission, which is a multi-State governmental organization 

that represents the natural resource interests of 17 States. State governors serve as 

commissioners. The Commission operates through several committees composed of 

representatives from State Departments of Natural Resources or Environmental Protection. 

On May 15 & 16, 2001, OSM participated in an intergovernmental forum to discuss mine 

placement of coal combustion wastes. The forum was hosted by the Interstate Mining Compact 

Commission and the U.S. Environmental Protection Agency. The 43 forum participants 

discussed existing State and Federal provisions for regulating mine placement of coal 

combustion wastes, as well as other regulatory problems and issues. 

 On May 21-23, 2001, OSM, in cooperation with the Interstate Mining Compact 

Commission and the Western Interstate Energy Board, conducted a very successful meeting in 

St. Louis to review and discuss its new Ownership and Control Rule governing the issuance of 

surface coal mining permits. Representatives from 17 States attended the meeting. 

Abandoned Mine Land Issues

 OSM consults extensively with the National Association of Abandoned Mine Land 

Programs. The Association is an organization of 26 State agencies and 3 Indian tribes that 

implement federally funded programs to reclaim abandoned or inadequately restored land and 

water resources adversely affected by past coal mining. The Association, organized in 1982, 

provides a forum to address current issues, discuss common problems, and share new 

technologies regarding the reclamation of abandoned mine lands. It fosters positive and 

productive relationships between the States and Indian tribes and the Federal Government. 
138 

OSM participated in the Association’s August national conference as well as other issue-specific 

meetings during the year. 

 Through the Appalachian Clean Streams Program, OSM works with States and watershed 

organizations to reclaim streams impacted by acid mine drainage from abandoned coal mines. 

This can involve directly helping them with grant applications as well as funding summer interns 

that work for watershed organizations, assisting in a wide variety of stream-related activities 

such as fund raising and complying with environmental regulations. 

Coal Mining on Indian Lands

OSM is involved in an active partnership with representatives of tribal governments that 

have coal mining operations on tribal lands. Specifically, the Navajo Nation, the Hopi Tribe and 

the Crow Tribe are involved in the review of all permitting actions and representatives of these 

Tribes participate in the monthly inspections of mining operations and citizen complaint 

investigations. 

 OSM is helping revise the OSM-BIA-BLM Memorandum of Understanding (MOU) for 

the Management of Coal Mining on Indian Lands. The MOU is the result of unprecedented 

cooperation among 15 BIA, BLM and OSM offices as well as six Tribal governments (the 

Navajo Nation, the Crow, Hopi, Northern Cheyenne, Ute Mountain Ute and Southern Ute 

Tribes). Numerous meetings and discussions were held over the past few years to clarify interbureau roles, procedures and responsibilities. The bureaus were very successful in resolving 

long-standing field operational issues. The MOU is now being reviewed for signature by Interior 

officials. It will provide needed guidance to the field personnel of the three bureaus and will 

ensure consistent management of coal mining activities on Indian lands. 

BUREAU OF LAND MANAGEMENT 

BLM’s planning process establishes goals and objectives for resource management and 

defines parameters for using BLM lands. During the planning process BLM considers 

socioeconomic impacts to State, local, and tribal governments and resource management 

programs. 

Consultation with State, local, and tribal government is an agreement to maintain and 

exchange information. Consultation and coordination early in our planning process encourages 

identification of issues and concerns allowing managers to make appropriate adjustments to 

proposed actions. 

 Consultation with officials of federally recognized tribes provides them opportunities to 

comment on land use plans. It identifies cultural or historical resources on and off trust lands that 

could be affected by BLM activities. At a minimum, tribal governments must have the same 

level of involvement as State and county governments. 
139 

 BLM can’t delegate our authority to make decisions affecting the public lands we 

manage. However, BLM strives to cooperate and communicate with State, local, and tribal 

governments to implement sound decisions that support a community’s economic and 

infrastructure development. BLM involves State and local governments by closely coordinating 

with State and local land use boards. In addition, all BLM land use plans or plan amendments 

and revisions must undergo a 60-day review Governor’s consistency review before final 

approval. 

DEPARTMENT OF JUSTICE 

 The Department has engaged aggressively in a wide variety of contacts and consultations 

with State, local, and tribal governments. In practice, the Department has demonstrated 

flexibility in responding to the complaints or concerns expressed by these levels of government. 

The outreach and consultation efforts of the Department are discussed in greater detail in this 

report. 

September 11th Victim Compensation Fund of 2001

 Shortly after the September 11 terrorist attacks, the President signed the September 11 

Victim Compensation Fund of 2001 (the "Fund") into law as Title IV of Public Law 107-42 

("Air Transportation Safety and System Stabilization Act")(the "Act"). The Act authorizes 

compensation to any individual (or the personal representative of a deceased individual) who 

was physically injured or killed as a result of the terrorist-related aircraft crashes on that day. 

 As prescribed the Act, the Department of Justice (the "Department"), in consultation with 

a Special Master, was to promulgate regulations that effectuate the purpose of the Fund. The 

Fund is being administered by Special Master Kenneth R. Feinberg, who the Attorney General 

appointed on November 26, 2001. The Department of Justice, in consultation with Mr. Feinberg, 

recently promulgated its Final Rule, which sets forth the regulations that govern the program. 

In promulgating its regulations, the Department depended mostly on outreach and 

consultation efforts. Indeed, the enormous feedback resulting from these efforts not only 

influenced but shaped most, if not all, the Department's decisions. These efforts were undertaken 

soon after the Act was enacted and continued for several months until the final days before the 

Final Rule was published. The Department met with various groups, including but not limited to, 

victims groups; elected officials from the Congress, New York State, and New York City; 

governmental agencies at the city, State, and Federal levels; Pentagon officials; private 

organizations specializing in victim compensation and ancillary issues; victims' employers; and, 

most importantly, victims' families. 

 The Department also solicited comments from the public both before and after issuing its 

"Interim Final Rule." People from all around the country and from foreign nations sent 

comments directly to the Department by way of land mail, email, and facsimile. All comments 

(more than 5000 total) were reviewed and considered in promulgating the Final Rule. 
140 

 These outreach and consultation efforts played a crucial role in establishing and 

administering this unprecedented program. 

OFFICE OF COMMUNITY ORIENTED POLICING SERVICES 

 COPS has a history of working closely with State and local government. Since its 

inception in 1994 through the Violent Crime Control Act, COPS has consulted regularly with 

professional law enforcement organizations, such as the International Association of Chiefs of 

Police, National Sheriffs Association, the Police Executive Research Forum, the Police 

Foundation, and NOBLE on current issues in law enforcement. COPS also maintains regular 

contact with intergovernmental organizations such as the U.S. Conference of Mayors, the 

National League of Cities, and the National Association of Counties, which provides the 

perspective of local government on law enforcement issues. Throughout the last seven years, 

COPS has conducted research and evaluations with local police departments to identify barriers 

and challenges to their implementation of community policing. COPS' consultation with State 

and local government is reflected in the training provided through the Regional Community 

Policing Institutes, best practices publications and other problem-specific guides, and targeted 

initiatives. 

For example, in August 2001, COPS sponsored a CEO Symposium to discuss with law 

enforcement leaders what pressing issues they saw for the 21st century. This group identified 

recruitment, racial/ethnic profiling and technology challenges as their top priorities. In a 

follow-up symposium in direct response to the tragedies of September 11, law enforcement 

officials reiterated their original priorities and added the need for information sharing between 

Federal, State and local law enforcement. Responding to these priorities, the COPS Office, in 

partnership with the International Association of Chiefs of Police, will convene a national 

summit on law enforcement intelligence identification, collection, analysis, sharing and use in 

March 2002. The COPS Office will continue to respond to these emerging law enforcement 

needs through the development and delivery of training, information and working conferences, 

and best practices. 

COPS provides training for specific grant programs. COPS has provided a variety of 

training for its technology grantees, including a series of workshops in 2001 and 2002 that assist 

them with planning, project management, purchasing and implementing of COPS-funded 

technology. In addition, the COPS Office will contact current MORE program applicants to 

determine if their technology needs have changed in light of the events of September 11. Since 

March 2000, the COPS Office has offered specific training to teams of COPS In Schools 

grantees for School Resource Officers and school administrators. 

 In 2001, COPS printed the Problem-Oriented Guide for Policing series for use by local 

law enforcement. These problem-specific guidebooks grew out of the COPS Office's knowledge 

of the kinds of issues police departments encounter and the difficulties they have in addressing 

them. The guidebooks provide law enforcement with problem-specific questions to assist in 
141 

identifying potential factors and underlying causes of specific problems (such as street 

prostitution, robberies at ATMs, and assaults in and around bars), identifies known responses to 

each problem, and provides potential measures to assess the effectiveness of problem-solving 

efforts. 

COPS' targeted initiatives address specific issues in a particular jurisdiction or significant 

issues shared by law enforcement agencies across the country. For example, COPS provided 

funding to the Reno Police Department in 2001 to work in partnership with the Police Executive 

Research Forum to develop and field-test a new Police Training Officer manual. This initiative 

addressed the need to re-tool the dominant field training officer model to incorporate community 

policing and problem solving principles throughout the training experience. Racial profiling and 

its affect on police-community relations are a concern for many agencies across the country. 

COPS funded an initiative called Promoting Cooperative Strategies to Reduce Racial Profiling to 

address the need for racial profiling prevention strategies. This initiative will result in a 

comprehensive series of best practices that can be replicated by law enforcement agencies across 

the country. 

By statute, COPS' grant programs address the needs of State, local and tribal government. 

Since 1994, COPS hiring and technology programs have provided funding for more 113,000 

additional officers across the country. With the help of funds from COPS, thousands of police 

jurisdictions have hired additional officers and purchased timesaving technology that allows 

officers to spend more time policing. 

FEDERAL BUREAU OF INVESTIGATION 

National Instant Criminal Background Check System 

By November 30, 2001, the third anniversary of the implementation of the National 

Instant Criminal Background Check System (NICS), the NICS had performed 26,421,632 

background checks (up from 17,573, 038 the previous year) to determine whether the receipt of a 

firearm by prospective transferee would violate Federal or State law. Currently, the FBI conducts 

these checks for Federal Firearms Licensees (FFLs) in 37 States for long gun and/or handgun 

purchases, while 26 States conduct the checks in their role as Point of Contacts (POCs) for long 

gun and/or handgun purchases. 

The FBI continues to work with its State and local partners regarding the operation of the 

NICS program by providing NICS implementation updates to the CJIS Advisory Policy Board 

(an advisory committee consisting of representatives of the law enforcement and criminal justice 

communities that provides advice to the Director of the FBI on the philosophy, concept, and 

operational principles of various criminal justice information systems managed by the FBI's 

Criminal Justice Information Services Division) and by working with State POCs to ensure the 

efficient and effective operation of the NICS. 
142 

 In addition, over the past three years, the FBI has engaged in a concerted outreach effort 

to educate and assist tribal, State and local courts, court clerk's offices, and criminal justice 

agencies regarding the need to provide disposition information to the FBI in response to a NICS 

inquiry. 

Sexual Offender Registration, Tracking, and Identification

The Jacob Wetterling Crimes Against Children and Sexually Violent Offender 

Registration Act provides a financial incentive for States to establish registration requirements 

for persons convicted of certain crimes against minors and sexually violent offenses. Megan's 

Law, Pub. L. No. 104-145, amended provisions of the Wetterling Act to require the release of 

registration information when necessary to protect the public. On July 21, 1997, at 62 FR 39009, 

the Attorney General published in the Federal Register final guidelines implementing the 

Wetterling Act and Megan's Law. 

Subsequent to the publication of the current Wetterling Act guidelines, the Wetterling 

Act was amended by the Campus Sex Crimes Prevention Act (the "CSCPA"), section 1601 of 

Division B of Pub. L. No. 106-386, 114 Stat. 1464, 1537. The CSCPA provides special 

requirements relating to registration and community notification for sex offenders who are 

enrolled in or work at institutions of higher education. The deadline for States to achieve 

compliance with the CSCPA is October 27, 2002. Supplementary guidelines specifically 

addressing the CSCPA are forthcoming and will be published in the Federal Register. 

Insights gained by the Department from working with States concerning the Wetterling 

Act-Megan's Law Guidelines have been instrumental in the drafting of the revised guidelines 

issued in 1999 and the guidelines for the CSCPA. These guidelines have been drafted to give 

States the maximum possible flexibility in developing conforming registration systems consistent 

with the statutory provisions. 

Criminal Justice Information Services Advisory Policy Board 

The Criminal Justice Information Services (CJIS) Advisory Policy Board (APB) is a 

Federal advisory committee representing Federal, State, and local criminal justice agencies. The 

APB makes recommendations to the FBI Director for policy and technical changes to the CJIS 

Systems. At their June 2001 meeting, the APB recommended the following significant policy 

changes that were subsequently approved by the Director. 

A. The APB recommended that the policy for dissemination of National Crime 

Information Center (NCIC) hot file information clearly prohibit commercial sale. Before this 

change, secondary dissemination of NCIC Article, Boat, Foreign Fugitive, Gun, License Plate, 

Missing Person, active Protection Order, Securities, Unidentified Person, Vehicle, Vehicle/Boat 

Part and Wanted Person Files was discretionary with the State Control Terminal Agency.
143 

 B. The APB recommended expanding the authorized use of the Interstate Identification 

Index via Purpose Code "F" in instances in which (1) a firearm has been pawned or (2) a law 

enforcement agency in possession of a firearm is relinquishing possession to the rightful owner 

(including a family member in cases of suicide.) The use of Purpose Code "F" had been limited 

to weapons related background checks, such as firearms permits. This policy change was based 

on the requests of local and State law enforcement officials. Before a firearm is relinquished to 

the owner, the law enforcement officer can ensure that individual is not disqualified by Federal 

or State law from possessing the firearm. The National Instant Criminal Background Check 

System (NICS) is accessible by Federal Firearms Licensees for firearm purchases. However, 

there was no means for criminal justice agencies to determine whether a person is disqualified 

from possessing a firearm. The following scenario demonstrates the benefits of this policy 

change: As part of the conditions of a protection order, the respondent surrenders his firearms to 

the court. The respondent was not convicted of any criminal offense associated with this 

domestic dispute. Also, a criminal history record check is conducted during the protection order 

hearings and no record exists. When the order expires, the court, under the new access policy, 

performs a criminal history check prior to returning the firearms and determines that the 

respondent has recent felony conviction in a neighboring jurisdiction. This access would prevent 

a felon from obtaining a firearm. 

OFFICE OF JUSTICE PROGRAMS

Executive Office for Weed and Seed

 

The Executive Office for Weed and Seed (EOWS) provides consultation concerning 

compliance with program requirements in a number of ways – via phone contacts, application 

workshops to assist communities in preparing applications which will meet DOJ requirements, 

and on-site technical assistance provided by EOWS staff and consultants. 

 

Violence Against Women Office

 

 The Violence Against Women Office (VAWO) works with State, local, and tribal 

governments on regulatory issues related to the Violence Against Women Act, including eleven 

grant programs administered by VAWO. In developing various regulations related to the grant 

programs, VAWO considered the comments of interested parties, including State, local, and 

tribal governments, and made certain suggested modifications. Similarly, VAWO will consider 

comments from these entities in revising the regulations to conform with the Violence Against 

Women Act of 2000. 

 VAWO has convened conferences for the State administrators of the STOP Formula 

Program and for other grantees, including State, local, and tribal governments, to provide 

information about program and regulatory requirements and to obtain input from grantees. For 

instance, VAWO sought input from State administrators in developing a required reporting form 

for the STOP Formula Program during a conference in spring, 2001. In addition, VAWO has 

taken several steps in 2001 and 2002 towards implementing recommendations made during a 
144 

tribal consultation held in September 2000 with leaders from Indian tribal governments to 

discuss the implementation of the STOP Violence Against Indian Women Discretionary Grant 

Program. VAWA has also organized several financial workshops for tribal grantees to clarify 

their administrative and financial requirements. These workshops occur on a regular basis and 

the next workshop will be held in May, 2002. 

 

 Corrections Program Office 

 

 In order to give the States additional time to use the Violent Offender 

Incarceration/Truth-in-Sentencing (VOI/TIS) grant funds, the Corrections Program Office (CPO) 

made all awards in years subsequent to 1996 supplements to the original award. This reduces the 

amount of paperwork and allows the States to meet their matching requirements easier. In 

addition, CPO offers continuing technical assistance to all grantees in order to aid the States in 

complying with the VOI/TIS Drug Testing Guidelines. 

 CPO continues to meet regularly with the Association of State Correctional 

Administrators (ASCA) in order to discuss and receive input and feedback on CPO public policy 

decisions. ASCA also remains actively involved, along with the Council for Juvenile 

Correctional Administrators, in assisting this Office in developing agendas for conferences and 

workshops in defining what are the technical assistance needs of States, localities, and tribal 

governments. 

Drug Courts Program Office

 

 At the Drug Courts Program Office, State Chief Justices and State Court Administrators 

are part of the official notification system for the awarding of drug courts grants. This allows 

these important players in the Drug Courts process full notification of on-going programs. 

The Office continues its relationships with membership organizations that represent State 

and local organizations, including judges and administrators. These relationships have been 

effective in supplying information concerning the Office’s accomplishments and programs to the 

entire country. 

 

 Over the course of 2001, the Office held a total of 60 training workshops for communities 

planning an adult, juvenile, family, or tribal drug court, as well as an implementation workshop 

for its tribal grantees. 

BUREAU OF JUSTICE ASSISTANCE 

The Bureau of Justice Assistance’s (BJA) mission is to provide leadership and assistance 

in support of local criminal justice strategies to achieve safe communities. BJA's overall goals 

are to reduce and prevent crime, violence, and drug abuse, and to improve the functioning of the 

criminal justice system. To achieve these goals, BJA programs emphasize enhanced 

coordination and cooperation with States, territories, local jurisdictions, tribal governments, 
145 

public and private organizations, and faith-based organizations involved in criminal justice 

activities. BJA administers several grant programs, including the Local Law Enforcement Block 

Grant Program, the Edward Byrne Memorial State and Local Law Enforcement Assistance 

Formula Grant Program, and a number of more narrowly focused discretionary programs. Each 

program has its own directives, but all involve significant interaction with state, local and tribal 

governments. When issuing new guidance, BJA publishes them in the Federal Register and 

informs interested constituent groups through outreach meetings and special mailings. 

Local Law Enforcement Block Grants (LLEBG) Program 

The LLEBG Program provides units of government with funds to underwrite projects 

designed to reduce crime and improve public safety. Beginning in Fiscal Year (FY) 1999, BJA 

launched an Internet-based, end-to-end, paperless grants management system to administer the 

LLEBG Program. This user-friendly system enables States, chief executive officers, program 

contacts, applicants, and constituents to submit and receive information about the program and 

allows BJA to administer LLEBG funding and access data about funds usage in a more 

streamlined, efficient manner. Certain aspects and provisions within the LLEBG Program 

necessitate BJA’s communication and coordination with constituent groups such as the National 

Association of Counties (NACO) and the National League of Cities. 

 BJA staff conducts on-site monitoring of grantees and hold hundreds of meetings, 

workshops, trainings, and technical assistance events each year, during which information is 

gathered by BJA that may be used to revise and update the administration of and policies 

governing the LLEBG Program. The LLEBG Program requirements include that local 

jurisdictions convene advisory boards and hold public hearings to review the proposed use(s) of 

LLEBG funds. These forums also provide the opportunity for constructive dialogue between 

members of the public and the grantees that, when transmitted to BJA, can lead to modifications 

in program requirements and improved guidance. 

Through ‘Ask BJA’ (an on-line Q&A component), State agencies administering the 

LLEBG Program and local recipient jurisdictions’ program managers may seek and receive 

guidance concerning the implementation of LLEBG-funded projects. An LLEBG Program 

Policy Review Board, internal within BJA, has the responsibility of analyzing and determining 

programmatic policy. 

Edward Byrne Memorial State and Local Law Enforcement Assistance Formula Grant Program

BJA works in partnership with State governments to create safer communities and 

improve criminal justice systems. State agencies work in conjunction with State criminal justice 

boards to strategically plan and evaluate ways to improve the functioning of the criminal justice 

system, with an emphasis on drug trafficking, violent crime, and serious offenders. Information 

received from the State agencies during on-site monitoring visits, monthly conference calls, 

workshops, hands-on technical assistance, and meetings, assist BJA in simplifying and reducing 

the requirements imposed on States. During Fiscal Year (FY) 2001, BJA begin streamlining its 
146 

grants administration process by examining the amount of paperwork grantees must file to obtain 

their grants. 

 Beginning in FY 2002, the grant period was changed from three to four years to ease 

administrative requirements and support State trends in subgranting and expending funds. A 

change to a four-year Statewide Drug and Violent Crime Control Strategy with minimal annual 

updates also reduces the States’ paperwork burden and allows more time to enhance strategic 

planning efforts. Additionally, BJA has begun to move towards an Internet-based, paperless 

grants management system that would further enhance communication and coordination. 

 Through the ‘Ask BJA’ on-line component, and other electronic and non-electronic 

means, State agencies administering the Byrne Program may seek and receive guidance 

concerning Byrne policies. 

 

OFFICE OF JUVENILE JUSTICE AND DELINQUENCY PREVENTION 

The Office of Juvenile Justice and Delinquency Prevention (OJJDP) is the Federal 

agency responsible for providing national leadership, coordination, and resources to develop and 

implement effective methods to prevent and reduce juvenile delinquency and improve the quality 

of juvenile justice in the United States. 

 The primary way that OJJDP consults with State, local, and tribal agencies and private 

entities regarding its programs is though the publication of an annual program plan. Pursuant to 

the provisions of Section 204 (b)(5)(A) of the Juvenile Justice and Delinquency Prevention 

(JJDP) Act of 1974, as amended, the Administrator of OJJDP must publish for public comment a 

proposed plan describing the program activities that OJJDP proposes to carry out during each 

fiscal year under Parts C and D of Title II of the JJDP Act. Taking into consideration comments 

received on this proposed plan, the Administrator then develops and publishes a final plan 

describing the particular program activities that OJJDP intends to fund during the fiscal year, 

using in whole or in part funds appropriated under Parts C and D of Title II of the JJDP Act. 

 OJJDP’s State and Tribal Assistance Division (STAD) directly consults with State, local, 

and tribal governments regarding its program requirements in a number of ways. For example, 

STAD imparts technical assistance and seeks consultation from State and local governments 

concerning the regulatory requirements applicable to the Formula Grants Program, Juvenile 

Accountability Incentive Block Grants Program, Enforcing the Underage Drinking Laws 

Program, Community Prevention Program, and the Challenge Grants Program. In 2001, all of 

the States participated in a national workshop entitled "Back to Basics," where they were 

provided instruction about regulations and policies and were offered an opportunity to comment 

and advise OJJDP from the State perspective. 

Each year, the Coalition for Juvenile Justice -- a national organization representing State 

Advisory Groups, that receives funding from OJJDP – prepares an annual report that provides 

recommendations to the President, the Congress, and the OJJDP Administrator on juvenile 
147 

justice issues, including the implementation of the Juvenile Justice and Delinquency Prevention 

Act (JJDP Act). This report is based, in part, on feedback from the juvenile justice field and thus 

serves to inform OJJDP about priority issues and concerns. 

 The State and Tribal Assistance Division conducts regular conference calls with Statelevel juvenile justice specialists who represent the four regions of the country (regions 

established by the Coalition for Juvenile Justice). These conference calls solicit input from the 

State specialists on STAD's administration of the six funding streams managed by the Division. 

 

OFFICE FOR VICTIMS OF CRIME 

The Office for Victims of Crime (OVC) administers and coordinates grants to State, 

local, and tribal governments for the purpose of crime victim compensation, crime victim 

assistance, child abuse prevention and treatment, victims’ rights, and victims’ services. OVC’s 

regulatory mandate provides many opportunities for interaction between Federal, State, local, 

and tribal governments. 

 

 OVC’s formula grants program distributes Crime Victims Fund monies to the States to 

support State crime victim compensation and assistance programs. OVC regularly consults with 

the States on the regulatory guidelines for these programs, and includes State personnel in the 

formulation, review, and evaluation of proposed program guidelines and regulations. 

 OVC also administers several discretionary grant programs in Indian Country. Two of 

these programs, the Children’s Justice Act (CJA) Partnerships with Indian Communities, and the 

Victim Assistance in Indian Country (VAIC) grant program, provide grants directly to tribal 

government agencies to establish reservation-based services to crime victims. OVC uses a 

variety of means to collaborate with the tribes and States over issues connected with these 

programs, including an ongoing working group composed of State and tribal victim assistance 

personnel to advise OVC on regulatory matters. The CJA program regularly works with State 

and tribal governments to inform and improve the treatment of child abuse victims in Indian 

Country. 

In Fall 2000, the 106th Congress passed the Victims of Trafficking and Violence 

Protection Act (P.L. 106-386) which provided aid for victims of terrorism and expanded OVC’s 

authority to respond to incidents of terrorism in cases outside the United States. OVC is working 

to implement the International Terrorism Victims Compensation Program (ITVCP), a 

compensation program for U.S. nationals and non-citizen U.S. government employees who are 

victims of terrorism outside the United States. OVC has solicited the assistance and input of 

several State Victims of Crime Act (VOCA) administrators in developing the parameters of this 

new program. 
148 

OFFICE FOR CIVIL RIGHTS 

 

Providing State Technical Assistance and Training Programs 

Consistent with the Justice Department’s current Strategic Plan, which highlights 

education and outreach as a key strategy in civil rights enforcement, OCR has in recent years 

focused on providing training and technical assistance to State planning agencies and their 

subgrantees. Beginning in fiscal year 1998, OCR designed a comprehensive technical assistance 

program for the administrative staffs of both funded State agencies and subgrantees. In most 

States, OCR has to repeat the daylong training sessions to accommodate the large number of 

subgrantees. In some States, to respond to the needs of remote jurisdictions, OCR has had to 

provide multiple daylong training programs at a variety of sites throughout the State. 

 OCR has made considerable progress in reaching its long-range goal of providing 

technical assistance to all fifty States and U.S. territories. As of January 1, 2002, OCR has 

conducted individually tailored civil rights training programs for California, Colorado, Florida, 

Michigan, Mississippi, North Carolina, Oregon, South Carolina, Tennessee, Texas, Utah, 

Washington, and West Virginia. In FY 2001, OCR also conducted a follow-up visit to Utah to 

determine the effectiveness of previous technical assistance efforts. 

ENVIRONMENT AND NATURAL RESOURCES DIVISION 

 The Division works closely with State and local enforcement agencies in enforcing 

environmental law. The Division has emphasized cooperative enforcement through joint 

enforcement actions, through training and support of local prosecutors, and in the development 

of enforcement policy. Specifically, the Division frequently works with State attorneys general, 

local prosecutors and the National Association of Attorneys General. In addition, in its litigation 

on behalf of the Secretary of the Interior for the benefit of Indian tribes, the Division coordinates 

with the affected tribes. 

 ENRD joined with the States of Delaware and Louisiana, and a regional air pollution 

control agency in Washington State, in reaching a Clean Air Act agreement with companies 

operating nine petroleum refineries. ENRD joined with the States of Alabama, Arkansas, 

Nebraska, Utah, South Carolina and Texas in reaching agreements with a steel manufacturer 

under three environmental statutes - the Clean Air Act, Clean Water Act and the Resource 

Conservation and Recovery Act (“RCRA”). The consent decree requires operation of pollution 

control equipment for nitrogen oxide emissions, remediation of areas of contamination and 

improvements in waste management. ENRD joined with the State of California in reaching a 

settlement with a DDT manufacturer and others for injuries to natural resources and cleanup 

costs resulting from releases of DDT in the Pacific Ocean in the vicinity of Los Angeles, 

California. ENRD joined with the States of Minnesota, Ohio and Louisiana and with Wayne 

County, Michigan in reaching settlement with a petroleum refinery under four environmental 

statutes - the Clean Air Act, RCRA, the Comprehensive Environmental Response, Compensation 

and Liability Act and the Emergency Planning and Community Right to Know Act. The consent 
149 

decree requires operation of pollution control technologies and reduction of emissions of 

nitrogen oxides, sulfur dioxide, particulate matter, and carbon monoxide by approximately 

24,000 tons per year. 

Federal, State and Local Task Forces for Criminal Environmental Enforcement. 

 Almost all Federal environmental statutes provide for delegation of programs to the 

States and recognize State enforcement authorities. Therefore, from the beginning of the Federal 

environmental criminal program, it has been essential to work closely with State and local 

agencies. Today, in nearly every case, information and other assistance is sought and obtained 

from State and local law enforcement and regulatory agencies. More importantly, however, such 

efforts are now going far beyond the solicitation of information and review of files, to the 

formation of task forces and other means of cooperation and coordination. 

 These task forces have been formed in many districts to address environmental crimes and 

related enforcement concerns. The Division’s attorneys act as members of the task forces as they 

work jointly with Assistant United States Attorneys on cases in the district, but also provide 

information, general assistance, and support to all such task forces as called upon. One good 

example of a closely coordinated criminal environmental prosecution in the past year was 

brought against a petroleum refinery operator in Texas for covering up violations under the 

Clean Air Act and for submitting false statements. 

Counsel for State & Local Affairs. 

Since 1994, the Division has included a counsel whose function is to serve as a liaison with 

State and local governments. 

Indian Resources 

The Indian Resources Section represents the United States in its capacity as trustee for 

American Indian tribes. To this end, the Section litigates cases in order to establish and protect 

the following: treaty hunting and fishing rights; tribal water rights; tribal lands and natural 

resources; and tribal jurisdiction and authority. The Section also defends actions by the 

Secretary of the Interior and Congress intended to further tribal sovereignty and Indian rights. 

This litigation is of vital importance to Indian tribes and Indian people. 

 

 Although the Indian Resources Section represents the interests of the United States and 

particularly the interests of the Interior Department, these interests are often aligned with the 

interests of Indian tribes. DOJ, therefore, works both informally and formally with tribes in 

pursuing litigation and negotiating settlements. In the past several years DOJ has had 

remarkable success in working with tribes, States, and private parties to settle disputes. 

Examples of recent water rights settlements include working with the Shivwits Band of the 

Paiute Indian Tribe of Utah, the State of Utah, and area irrigation districts to secure enactment of 

the Shivwits Band of the Paiute Indian Tribe of Utah Water Rights Settlement Act and working 
150 

with the Chippewa Cree Tribe of the Rocky Boy’s Reservation and the State of Montana to settle 

the Chippewa Cree Tribe of the Rocky Boy’s Reservation’s water rights. With regard to treaty 

fishing rights, DOJ worked closely with five Michigan tribes and the State of Michigan to 

negotiate a consent decree in United States v. Michigan, regarding treaty fishing rights in Lake 

Michigan.

DEPARTMENT OF LABOR 

OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION 

OSHA-Approved State Plans

State and local governments and their employees are specifically excluded from Federal 

coverage under the Occupational Safety and Health Act; thus, there is no OSHA 

intergovernmental mandate with regard to State and local governments. However, States that 

elect to accept responsibility (and up to 50 percent Federal funding of the cost of their 

program) for occupational safety and health enforcement in their State must first obtain 

OSHA approval of their "State plan," and as a condition of that approval, extend their 

protection to State and local workers. (States may also obtain approval of Public Employee 

Only State Plans.) Thus, in 24 States and two Territories, OSHA standards apply to State 

and local governments, as part of a voluntary program, not as a Federal mandate. (In January 

2001, OSHA initially approved the New Jersey Public Sector Only State Plan, covering the 

workplace safety and health of State and local government employees in New Jersey.) 

Nonetheless, OSHA does seek and consider State and local government views through its 

own and the State plans' standards promulgation processes. 

OSHA actively seeks input on proposed standards and regulations from States 

participating in the program through its regular coordination with its State plan partners. OSHA 

meets regularly with the State plans States by attending meetings of their organization, the 

Occupational Safety and Health State Plan Association (OSHSPA). At these meetings, specifics 

of new and proposed standards and regulations are discussed. 

OSHA's relationship with the approved State plans is based on the principle of 

partnership. The basic policies and procedures for monitoring State plans were developed as a 

Federal-State initiative over several years. The primary focus of program evaluation is the 

States' progress toward achieving their own OSHA-approved, results-oriented goals, in a manner 

consistent with the approach taken by OSHA under the Government Performance and Results 

Act (GPRA). This allows the States real flexibility to tailor their programs to State-specific 

circumstances, including the safety and health of State and local government workers. OSHA 

also monitors whether the States meet statutory mandates. The States' efforts are reported 

annually in both State and Federal evaluation reports. OSHA also continues to assist the States 

with various technology and data issues as part of this initiative. 

 
151 

OSHA’s proposed rule revising 29 CFR Part 1953 (66 FR 56043), which streamlines the 

process for submission, review and approval of plan supplements, including changes to State 

occupational safety and health legislation and standards, was developed in conjunction with a 

Federal/State Task Force and has been discussed extensively at meetings of the Occupational 

Safety and Health State Plan Association. The proposed regulatory change, published on 

October 6, 2001, includes an explicit statement of OSHA’s longstanding statutory interpretation 

that States may implement their adopted regulations, standards, and procedures without needing 

to obtain prior Federal approval. Final action on the proposed regulatory revision will likely 

result in a reduction in the burden estimate. 

PENSION AND WELFARE BENEFITS ADMINISTRATION 

Definition of Collective Bargaining Agreement (ERISA section 3(40))

This regulation will establish criteria for determining whether an employee benefit plan is 

established or maintained under or pursuant to one or more collective bargaining agreements for 

purposes of its exclusion from the Multiple Employer Arrangement (MEWA) definition in 

section 3(40) of the Employee Retirement Income Security Act of 1974 (ERISA), and thus 

exempted from State regulation. The Department has developed a revised proposal utilizing a 

Negotiated Rulemaking Advisory Committee (the Committee) appointed by the Secretary in 

1998. The Committee is composed of representatives from labor unions, multi-employer plans, 

employer/management associations, Railway Labor Act plans, third party administrators, 

independent agents and brokers of health care products, insurance carriers, and the Federal 

government. State insurance regulators were represented through the participation of the 

National Association of Insurance Commissioners (NAIC). State insurance regulators also 

participate in a meeting of the Committee, for the purpose of reviewing public comments to the 

proposed rule. 

Final Rule for Reporting by Multiple Employer Welfare Arrangements and Certain Other 

Entities that Offer or Provide Coverage for Medical Care to the Employees of Two or More 

Employers

The Department is currently finalizing this rule based on a previously published interim final 

rule governing certain reporting requirements under Title I of ERISA for multiple employer 

welfare arrangements (MEWAs) and certain other entities that offer or provide coverage for 

medical care to the employees of two or more employers. The interim final rule requires the 

administrator of a MEWA, or other entity, to file a form (Form M-1) with the Secretary of 

Labor for the purpose of determining whether the requirements of Part 7 of ERISA are being 

met. Since publishing the interim final regulation, the Department has received numerous 

comments that are being incorporated into the final regulation. The Department receives and 

shares information with State insurance commissioners through periodic consultations with 

NAIC representatives on the Form M-1, the instructions for Form M-1, and the interim final 

regulation. In June 2001, the Department delivered a presentation on MEWAs and the Form 
152 

M-1 to the NAIC. Discussions have resulted in a request by the Commissioners that the 

Form M-1 database become available for their use. 

MINE SAFETY AND HEALTH ADMINISTRATION 

 

 MSHA continues to work closely with representatives from State, local, and tribal 

governments, and academia. A designated individual in each State government serves as a point 

of contact between MSHA and that State. A number of States have agencies that regulate 

mining in that State. MSHA works particularly closely with these agencies. MSHA co-sponsors 

institutional meetings with the Virginia Polytechnic Institute and State University (Virginia 

Tech) and the University of Utah, where scientific papers concerning mine safety and health are 

presented. Representatives from the State’s regulatory agencies sit on the advisory boards for 

these meetings, and in that capacity suggest the agenda and topics. 

Many local governments operate mines, typically rock quarries or sand and gravel pits to 

produce material for road construction and maintenance. These mines are under MSHA’s 

jurisdiction, and MSHA actively seeks input to proposed standards and regulations from these 

interests, and involves them in other outreach efforts. MSHA manages a number of grants to 

States for mine safety and health activities. 

A yearly grant to the Navajo Nation finances miner training and special emphasis training 

for citizens. Mining in this area is unique in a number of ways. For instance, coal slurry is 

usually moved to power plants by railroad cars, trucks or conveyor belts. Coal slurry from the 

mine on Navajo Nation territory moves through a pipeline, using a combination of pumping 

stations and gravity flow, to a power plant several hundred miles away. Another unique aspect 

of this mine is that many citizens live on the mine property. Regular vehicular traffic, such as 

automobiles and school buses, share common roads with heavy mining equipment. Some of the 

funds from these grants are used for public awareness to teach the dangers inherent to these 

situations. MSHA also works with a number of school boards to promote outreach programs 

aimed at teaching children the dangers of playing in and around abandoned mine shafts and 

swimming in quarries. 

 Efforts to facilitate an open exchange of ideals and information between the mining 

public and operators are on-going. MSHA held a number of stakeholders meetings throughout 

the country seeking input to the Agency’s strategic plan. Representatives from various States 

provided comments and suggestions that, along with those from other groups such as industry 

and labor, were incorporated into the draft plan. To assist operators in implementing new rules, 

MSHA has developed compliance-related material, such as compliance guides, sample plans, 

informational material, and forms. 
153 

ENVIRONMENTAL PROTECTION AGENCY

Since passage of the Unfunded Mandates Reform Act in 1995, and Executive Order 13132 

on Federalism in 1999, EPA has taken steps to include government officials from States, 

localities, and Tribes in the development of regulations, policies, and guidance that affects them. 

Among other steps, the Agency has: 

• finalized Agency guidance for EO 13132; Federalism; which includes procedures for the 

EO’s implementation, technical guidance on how to analyze impacts on States and 

communities, and guidance on selecting appropriate techniques for sharing information 

and gathering advice from State and local officials during the formative stages of the 

policy process; 

• expanded training of Agency staff regarding intergovernmental consultations to include 

Regional offices; and 

• continued to offer technical assistance to agency program staff from the Office of 

Congressional and Intergovernmental Relations. 

EPA is also seeking to strengthen its partnership with tribal governments through 

implementation of EO 13175: Consultation with Tribal Governments. Since the Executive Order 

became effective, EPA has been closely examining rules under development for any potential 

effect on Tribes and seeking consultation with them under appropriate circumstances. The 

Agency has formed a workgroup, with the participation of tribal representatives, to develop a 

consultation guidance for Agency personnel. EPA held several meetings with Tribal leaders to 

get input from them about developing means of effective consultation with the Tribes. 

Consultation Mechanisms, General Outreach Activities and Communication Aids 

EPA has several mechanisms to help State, local, and tribal officials learn about EPA's 

regulatory plans and to let them know how they can participate in the rule-development process. 

For example, EPA distributes reprints of the semi-annual Regulatory Agenda to more than 300 

State, local, and tribal government organizations and leaders. EPA also participates in a 

Federal government- wide State/Local Governments Web site. In addition, the Agency 

supports hotlines in both EPA Headquarters and the Regions where callers can get information 

on a range of topics, including regulatory and compliance information (these communication 

aids are further highlighted below). 

In addition, EPA has chartered a cross-media FACA advisory body, the Local 

Governments Advisory Committee. Its Small Communities Advisory Subcommittee routinely 

advises the Agency on issues and concerns, and makes recommendations on regulations, 
154 

policies, and guidance affecting the development and delivery of environmental services. The 

Tribal Operations Committee similarly addresses tribal interests. EPA program offices 

regularly work with groups of State, local, and tribal officials to address specific environmental 

and programmatic issues. Examples include media-specific FACA committees, regulatory 

negotiation advisory committees and policy dialogue groups. 

The Agency continues to work with States under the National Environmental 

Performance Partnership System (NEPPS), principally through the Environmental Council of the 

States (ECOS). The objective is to ensure that the States are informed and involved in Agency 

activities, particularly those affecting State-implemented programs. Most of this work is 

accomplished through committees that have both State and EPA members, but also through 

forums that are open to other stakeholders. EPA and the ECOS have an active joint work group 

to address continuing implementation issues and work to identify and remove remaining barriers 

to effective implementation of NEPPS. ECOS has also initiated a number of other projects with 

EPA consultation including work on children’s health issues, a partnership to build locally and 

nationally accessible environmental systems, and development of core performance measures. 

The Office of Pollution Prevention and Toxics (OPPT) has a number of ongoing outreach 

mechanisms related to its mission activities that allow OPPT to routinely secure State and tribal 

insights and advice. These processes have been institutionalized in many ways and are 

therefore to some extent independent of specific rulemaking. 

Some of the most important are identified below: Established in early 1990's the Forum 

on State Tribal Toxics Action (FOSTTA) was created as a vehicle through which the Office of 

Pollution Prevention and Toxics (OPPT) gets State and tribal involvement in OPPT decision 

making. 

OPPT also utilizes the State Federal FIFRA Issues Research and Evaluation Group 

(SFIREG) which was established in 1974 by cooperative agreement between EPA and the 

American Association of Pesticide Control Officials, the association that represents State level 

pesticide regulatory officials. SFIREG identifies, analyzes and provides State comment on, 

pesticide regulatory issues, and provides a mechanism for ongoing exchange of information 

about EPA and State pesticide programs. With a full committee and two subcommittees, there is 

a total of eight regularly scheduled meetings each year offering State officials the opportunity to 

meet with EPA. Regulations in progress are routinely brought to these meetings for discussion. 

Some specific examples of results of consulting with SFIREG include the formation of 

joint EPA-State workgroups to deal with a number of issues/projects, such as: (1) developing 

guidance documents for use by EPA Regions and State agencies to define Quality Management 

and Quality Assurance procedures for State pesticide programs (completed in 2000); (2) 

improving or clarifying a number of pesticide labeling issues, including products used in public 

health mosquito control programs, restricted reentry intervals for agricultural workers, label 

precautions to protect bees and other pollinators, and new requirements for the safe handling and 

use of phosphine gas fumigants (these are on-going now). EPA has also used SFIREG to 
155 

provide State input on labeling policy in general through comments on revisions to the Label 

Review Manual used by EPA staff. 

EPA has also developed a variety of materials intended to help small governments more 

easily understand agency regulations. 

Profile of Local Government Operations: The Profile details all of the environmental 

requirements with which a local government must comply. Information in the Profile is 

organized on the basis of operations, i.e., motor vehicle servicing, property management, etc. 

This makes it easier for the representative of a local government responsible for an operation to 

find out about all of the environmental requirements that might impact his or her operation and 

where to get more detailed compliance information. 

Local Government Environmental Assistance Network (LGEAN): EPA helps support this 

Internet-based information service (that has parallel toll-free voice and fax-back options). 

LGEAN provides a first stop for local government officials with questions about environmental 

compliance. The site contains a wealth of information from EPA and eight participating nongovernmental organizations. Users can ask questions of experts, consult with their peers, review 

and comment on developing regulations, and find the full text or summaries of State and Federal 

environmental statutes. LGEAN alerts users to hot topics and new developments in 

environmental compliance, tells them where to find technical and financial assistance, and 

provides them with a grant writing tutorial. 

Small Government Agency Plan: The Agency's interim Small Government Agency Plan 

supplements the intergovernmental consultations described above. The Plan outlines the analysis 

rule writers complete to determine whether the regulatory requirements of a rule might uniquely 

affect small governments. Under the plan, EPA encourages attention to such factors as whether 

small governments will experience higher per-capita costs due to economies of scale, whether 

they would need to hire professional staff or consultants for implementation, or if they would be 

required to purchase and operate expensive or sophisticated equipment. The findings under the 

Small Government Agency Plan are published in the Federal Register with proposed and final 

rules. When there are unique or significant impacts on small governments, a range of actions are 

taken to inform and assist them. 

Newsletter/Internet Site for Small Governments: Under a cooperative agreement funded by EPA, 

the International City/County Management Association (ICMA) publishes a newsletter designed 

for small governments covering regulatory and other environmental program activities of interest 

to them. ICMA's Environmental SCAN is also published electronically on the Internet. Access 

is free to anyone interested in local government issues; the ICMA site is linked electronically to 

EPA's Federal Register site so that readers interested in a regulation covered in the newsletter 

can immediately gain access to the actual text. As part of the project, ICMA has also conducted 

several workshops for small government officials on regulatory and other environmental 

management topics. 
156 

Guide to Federal Environmental Requirements for Small Governments: EPA also publishes and 

distributes the small communities guide --a reference handbook to help local officials become 

familiar with Federal environmental requirements that may apply to their jurisdictions. In the 

guide, Federal regulations are explained in a simple, straightforward manner. Mandated 

programs described in the guide include those for which small communities have major 

responsibilities, such as landfills, public power plants, sewerage and water systems. 

Regional Guides to Federal Environmental Requirements for Small Governments: EPA Region 

VIII publishes and distributes a small community reference handbook to help local officials in 

Colorado, Montana, North and South Dakota, Utah and Wyoming become familiar with Federal 

environmental requirements that may apply to their jurisdictions. In the guide, Federal 

regulations are explained in a simple, straightforward manner. In addition, up-to-date contact 

lists for State environmental programs are included. 

National Online Dialogue on Public Involvement: In July 2001, EPA convened an innovative, 

online "e-gov" dialogue to obtain input from the public about how to improve public 

involvement in EPA’s decisionmaking process. A portion of this 10-day discussion dialogue 

was devoted to public involvement issues related to State, local, and Tribal governments. An 

expert panel consisting of representatives from State, local, and Tribal governments led the 

discussion, which focused on the three key issues: public involvement “best practices” of States, 

tribes and local governments; public involvement in delegated programs; and ways EPA can 

support local government participation in EPA decisionmaking. Participants posted over 75 

messages on these topics, and additional messages also related to State, local and Tribal 

government issues. EPA organized and made the dialogue record available online to the public, 

and plans to continue to use much of this material in public involvement training for EPA staff as 

well as to inform policy implementation. The success of this e-gov dialogue is paving the way 

for future e-gov approaches and opportunities. 

State and Local Government Input on EPA’s Public Involvement Policy: In December 2000, 

EPA released a draft Public Involvement Policy that recognizes and reflects, among other things, 

the changing and growing relationship between EPA and State and local governments. EPA's 

previous 1981 Public Involvement Policy contained public involvement requirements for 

delegated programs, since most State and local governments then had limited capacity to carry 

out environmental programs and associated public involvement activities. In contrast, the final 

2002 Policy will emphasize EPA assistance to and partnerships with delegated programs’ public 

involvement activities. EPA received comments from 26 State agencies, 12 local governments, 

and four tribal governments on the draft Policy, and is revising the draft Policy based on received 

comments and additional meetings with States. States expressed strong interest in partnering 

more with EPA on public involvement activities, and in utilizing the tools (training, evaluation 

and sharing information) that EPA is creating to enhance public involvement in the Agency’s 

decisions. At the same time that EPA was receiving public comments on the draft Policy, EPA 

prepared a draft implementation plan for the Policy and invited States and Tribes to assist 

informally in developing the implementation plan. The final implementation plan is expected to 

be released with the final Public Involvement Policy in spring 2002. 
157 

Office of Solid Waste and Emergency Response

Revoking the Case-by-Case (CBC) Extension of the Effective Date of Land Disposal 

Restrictions for Hazardous Wastes Generated at the FMC Pocatello, Idaho facility 

FMC had operated their Pocatello, Idaho facility for over 50 years to manufacture 

elemental phosphorus that was shipped to other facilities to produce phosphates and other 

phosphorus-based products. The facility is located on the Shoshone-Bannock Tribe's lands, 

referred to as the Fort Hall Indian Reservation. This facility generated five large-quantity 

hazardous waste streams that were reactive and ignitable and posed unique handling, treatment, 

and disposal problems because of the presence of elemental phosphorous and cyanide. Each of 

these waste streams also contained varying levels of Naturally Occurring Radioactive Material, 

which most off-site commercial TSDs are not permitted to manage. Because there was no 

available commercial treatment capacity, we granted a national capacity variance and two caseby-case (CBC) extensions of the LDR effective date for these wastes to allow FMC the time to 

construct an on-site treatment plant and begin operating it by May 2002. These extensions of the 

LDR effective date allowed FMC to continue disposing these five hazardous wastes in two n-site 

surface impoundments (referred to as Pond 17 and Pond 18). In mid-October 2001, FMC 

decided that elemental phosphorus production at the facility was no longer cost effective, and 

would close it by the end of the year ( 2001). FMC likewise halted construction of the onsite 

treatment plant on which they had already spent over $100 million for the design and 

construction. 

FMC’s decision to stop work on the treatment plant could be seen as a basis for 

revocation, since FMC agreed to complete the treatment plant as a condition for receiving the 

CBC extension. This is the first time EPA had considered revoking a CBC extension. FMC 

initially asked that the CBC be terminated on December 31, 2001 to conduct an orderly 

shutdown and secure the facility in a way that ensures worker safety and minimizes waste, and 

leaves the plant and equipment in a secure and environmentally safe condition. However, FMC 

then attempted to revise their plans and schedule for decommissioning the facility. FMC 

submitted a revised plan that would allow the original CBC extension date of May 26, 2002 be 

left intact to permit them to place phossy water, generated during decommissioning, into the 

onsite ponds. The Tribes opposed the continued disposal of these untreated wastes in the onsite 

surface impoundments. They expressed again a long-held concern about the emissions of 

phosphine and hydrogen cyanide from these ponds into the air, the potential mismanagement 

(e.g., overtopping) of the surface impoundments, and potential groundwater contamination. 

After having discussions with Tribal staff, EPA Region 10 staff and the State of Idaho, EPA 

concluded the best environmental solution was to allow FMC to implement their original 

shutdown plan and operate the Pocatello facility until December 31, 2001. EPA decided to 

revoke their CBC extension on January 1, 2002. In late November, EPA provided the Tribes 

with a draft letter to FMC, for their review and comment, that provided its tentative decision to 

revoke the CBC extension, in its entirety, as of January 1, 2002. EPA and the Tribes reached a 
158 

consensus that the FMC CBC extension should be revoked effective January 1, 2002. On 

December 21, the letter was sent to FMC, notifying them of this decision by EPA. 

Small Government Pilot Projects and Capacity Building

Policy on Flexible State Enforcement Responses to Small Community Violations 

EPA’s Office of Enforcement and Compliance Assurance (OECA) issued the Policy on 

Flexible State Enforcement Responses to Small Community Violations in 1995. The policy 

establishes parameters within which a State can expect EPA to defer to the State’s decision to 

address a small community’s environmental violations with comprehensive, capacity-building 

compliance assistance instead of with the traditional enforcement action and penalty. The policy 

gives States the flexibility to help small communities address environmental problems on a 

"worst things first" basis. The policy also creates a new incentive for small communities to ask 

the State for help when they think they may have an environmental problem. 

Developed as a result of the Agency’s ongoing dialog with small communities, this 

policy is intended to address the concern that small communities that lack the technical resources 

needed to comply with all environmental regulations may not seek help for fear of becoming 

entangled in the enforcement process. Small localities making substantial progress towards 

compliance in accordance with a schedule developed with State assistance will generally not be 

subject to State or Federal enforcement actions. 

Based on EPA’s experience so far in Oregon, the policy works as follows. 

Environmental Partnerships with Oregon Communities (EPOC) offers compliance assistance to a 

small community that requires assistance to meet its environmental obligations. A team of 

experts from the State performs a comprehensive review of the communities operations to 

identify all current environmental violations and areas of concern for future violations. If a 

community cannot correct all its violations quickly, the State negotiates an enforceable 

compliance schedule which establishes a specified time period for correcting the violations on a 

priority basis. The community then addresses those violations according to the schedule, 

beginning with those that have the greater potential impact on health and/or the environment. 

The State refrains from taking enforcement actions and waives or reduces penalties that normally 

would be assessed for violations, so long as the small community is making "good faith” efforts 

towards implementing the schedule. 

Of course, small communities that do not meet the negotiated compliance schedule may 

be faced with State or Federal enforcement actions. The policy does not apply to criminal 

violations and EPA retains its independent authority to take immediate action in the event of any 

violation that represents an "imminent and substantial endangerment” to the public or the 

environment. More than a dozen Oregon communities have signed such agreements and others 

are “in the pipeline.” Nebraska conducts a similar program. Under the Nebraska Environmental 

Partners Program (NEPP), more than 200 communities have conducted comprehensive 

environmental self-assessments with the assistance of State government agencies of the state of 
159 

their environmental compliance. Although no violations have been identified, NEPP has 

developed compliance assistance and funding strategies to address the compliance issues that 

have been identified through the self-assessment process. 

In 2001, EPA published a Federal Register notice taking public comment on possible 

revisions to the Policy. Following extensive information gathering from stakeholders, EPA 

published a Federal Register Notice on January 23, 2002 (67FR3185) that discussed the history 

and intent of the Policy on Flexible State Enforcement Responses to Small Community 

Violations, the limited extent to which States have chosen to implement the Policy, and the 

major reasons for limited implementation, as identified by stakeholders. The Notice discusses 

various options for addressing those impediments, and solicits public comment on possible 

revisions to the Policy. Public comments are due to EPA by April 23, 2002. 

SOCIAL SECURITY ADMINISTRATION

The Old-Age, Survivors and Disability Insurance programs under title II of the Social 

Security Act are exempt from the Unfunded Mandates Act of 1995. The Social Security 

Administration’s (SSA) rules generally do not raise Unfunded Mandates Reform Act issues. 

EPA does consider the effects of each of its regulatory initiatives on State/local/tribal 

governments, and have developed a consultation process with the “Big 7” organizations. 

Although SSA had no final rules formally covered by the Unfunded Mandates Reform 

Act during this period, SSA did follow the spirit of the Act in planning for implementation of the 

Ticket to Work and Work Incentives Improvement Act of 1999. The final rules were published 

on December 28, 2001. Throughout 2001, SSA sponsored and participated in numerous 

educational forums throughout the country in order to stimulate discussion about the Ticket to 

Work program. SSA employed its long-standing relationship with the State vocational 

rehabilitation agencies through a variety of meetings, forums and other conversations to gain 

insight as to how to develop these rules. Furthermore, SSA consulted on a regular basis with 

those States selected for the first round of the Ticket to Work rollout and the Department of 

Education’s Rehabilitation Services Administration in preparing the rules. The final rules reflect 

its efforts to respond to the issues raised by the States during these consultations. 

In most cases, SSA’s existing rules that affect State/local/tribal governments do so because the 

governments have voluntarily entered into an agreement with SSA. For example: 

• In the Supplemental Security Income (SSI) program, SSA makes the Medicaid 

determination for a State, and includes the State supplementation payment in the SSI 

check, only for those States that have chosen to have SSA do so. 

• State Disability Determination Services that make the disability determination for SSA 

do so as part of an agreement with us, and fund their activities as appropriate. 

SSA continues to examine all its rulemaking activities and assess the need to consult with or 

address concerns raised by State, local and tribal governments. 
160 

DEPARTMENT OF TRANSPORTATION 

In developing the Administration's hazardous materials transportation reauthorization 

legislative proposal, RSPA and the DOT Hazmat Reauthorization Team gave special 

consideration to the needs of our State, local government and Indian tribe enforcement partners. 

Through the Cooperative Hazardous Materials Education Development (COHMED) Program 

and through State and local government comments to a hazmat reauthorization legislative 

docket, we became aware of a threat to States' ability to enforce the Federal hazardous materials 

transportation law, 49 U.S.C. 5101 et seq. The State and local governments described a lawsuit 

that asserted that their enforcement procedures and standards had to match the Federal standards 

or otherwise should be preempted. They stated that preemption of their no-fault approach to 

hazmat transportation violations would eviscerate their compliance programs and undermine 

their ability to partner with the Federal Government in this area. In response to the State and 

local government concerns, DOT inserted in the Administration's hazmat reauthorization bill a 

provision exempting from Federal preemption State, local or tribal procedures, penalties, or 

other standards used to enforce hazmat transportation requirements. That pro-State provision is 

part of the Administration's bill that was sent to Congress, was introduced by request in both 

houses (S.1669, HR 3276), and is under consideration in Congress. 
161 

CHAPTER III: A REVIEW OF SIGNIFICANT REGULATORY MANDATES

Federal agencies issued four rules that were subject to Sections 202 and 205 of the 

Unfunded Mandates Reform Act because they require expenditures in any year by State, local or 

tribal governments, in the aggregate, or by the private sector, of at least $100 million. The 

Department of Energy issued one proposed rule; the Department of Transportation issued two 

proposed rules, and the Environmental Protection Agency issued one proposed rule. There were 

no rules for which agency analyses demonstrated expected expenditures in any year by State, 

local or tribal governments, in the aggregate, totaling more than $100 million. All of the rules 

issued, which were covered by the Act because of expenditures exclusively by the private sector. 

OMB worked with the agencies to ensure that the selection of the regulatory option for 

final rules fully complied with the requirements of Title II of the Act. For proposed rules, OMB 

often worked with the agency to ensure that they also solicited comment on alternatives. These 

were generally alternatives that could, in light of further public comment and additional analysis, 

be shown to be the least costly, most cost-effective, or least burdensome option at the final rule 

stage. Agency statements regarding compliance with the Act are included with the descriptions 

of the rules below. 

DEPARTMENT OF ENERGY 

Energy Efficiency Standards for Central Air Conditioners and Heat Pumps (NPRM) 

 This rule proposes to revise the energy conservation standards for central air conditioners 

and central air conditioning heat pumps to a level of 20 percent, which is the amount DOE 

determined was the maximum amount that was economically feasible. Consistent with this 

proposed determination, DOE proposes a Seasonal Energy Efficiency Rating of 12, with a 

corresponding Heating System Performance Factor of 7.4. These standards would apply to 

manufacturers in 2006. 

 DOE estimates that the proposed standards, if adopted, would not result in the 

expenditure by the private sector of $100 million or more in a year, with the exception of one 

year in which industry expenditures could total approximately $110 million. DOE believes that 

this proposed rule would establish energy conservation standards for central air conditioners and 

heat pumps that are designed to achieve the maximum improvement in energy efficiency that 

DOE determined to be both technologically feasible and economically justified. 

DEPARTMENT OF TRANSPORTATION 

Tank Level or Pressure Monitoring Devices (NPRM) 

 This rule proposes various regulatory options for the use of tank level or pressuremonitoring devices as mandated by the Oil Pollution Act of 1990. The rule would set minimum 

standards for the performance and use of these devices on single-hull tank ships and single-hull 

tank barges carrying oil as cargo. 
162 

 DOT estimates that the present value of the total cost of the options in this proposed rule 

range from $82 million to $211 million. All the costs will be incurred during the three-year to 

five-year phase in period. The Department proposed eight options and sought public comment. 

Tire Pressure Monitoring Systems (NPRM) 

This rule proposes to establish a new Federal Motor Vehicle Safety Standard that would 

require tire pressure monitoring systems to be installed in new passenger cars and in new light 

trucks and multipurpose passenger vehicles. The proposal includes alternative approaches. 

DOT estimates that this proposed rule would not result in the expenditure by State, local, 

or tribal governments, in the aggregate, of more than $100 million annually, but it would result 

in the expenditure of that magnitude by vehicle manufacturers and/or their suppliers. The 

Department proposed two alternative standards and sought public comment. 

ENVIRONMENTAL PROTECTION AGENCY 

Control of Emissions From Nonroad Large Spark Ignition Engines and Recreational Engines 

(Marine and Land-Based) (NPRM) 

 This rule proposes emission standards for several groups of nonroad engines including 

large spark-ignition engines such as those used in forklifts and airport tugs; recreational vehicles 

using spark-ignition engines such as off-highway motorcycles, all-terrain vehicles, and 

snowmobiles; and recreational marine diesel engines. 

EPA estimates that this proposal will not result in Federal mandates for State, local or 

tribal governments, but determined that the rule does contain Federal mandates that may result in 

expenditures of more than $100 million to the private sector in any single year. EPA believes 

that the proposal represents the least costly, most cost-effective approach to achieve the air 

quality goals of the rule.