REGULATORY REFORM

Procedural and Analytical

Requirements in Federal

Rulemaking

Statement of Robert P. Murphy, General Counsel

United States General Accounting Office

GAO Testimony

Before the Subcommittee on Regulatory Reform and

Paperwork Reduction, Committee on Small Business

House of Representatives

For Release on Delivery

Expected at

10:00 a.m., EDT

on Thursday

June 8, 2000

GAO/T-GGD/OGC-00-157

Statement

Regulatory Reform: Procedural and

Analytical Requirements in Federal

Rulemaking

Page 1 GAO/T-GGD/OGC-00-157

I am pleased to be here today to discuss our reviews of agency compliance

with a number of procedural and analytical requirements in federal

rulemaking. The reviews were conducted in response to congressional

concerns that agencies had not adequately considered the effects of their

actions on regulated entities or worked to minimize any negative effects.

The requirements that we examined are contained in a number of statutes

and executive orders governing the rulemaking process, including the

Administrative Procedures Act, the Regulatory Flexibility Act, the

Unfunded Mandates Reform Act, and Executive Orders 12866 and 12612.

In brief, our congressionally requested evaluations have produced a mixed

result. While they may not have been representative of all rulemakings, in

some cases our work disclosed inadequate data, methodologies, or

assumptions, and in other disclosed noncompliance with statutory

requirements or executive orders. There are examples in which our

reviews have helped ensure better adherence to applicable regulatory

requirements. On the other hand, sometimes our reviews did not disclose

a failure to comply with rulemaking requirements, but provided Congress

with factual detail and a better understanding of the agencies’ procedures

and decision making. In others cases, our reviews established that the

agencies were acting within allowable discretion to determine that certain

requirements were inapplicable, and in others, that the requirements

themselves were narrowly tailored and had little effect on rulemaking. We

also found cases where regulations that were considered burdensome by

the regulated community were required by the statute being implemented.

Some of our work on regulatory issues has clearly demonstrated the value

of congressional oversight of agency rulemaking. Congressional oversight

can clarify issues left unclear in agencies’ public statements about their

rules and, on occasion, can directly result in changes to agencies’ rules.

The targets of that oversight can vary substantially—from the particular

(and sometimes highly technical) elements of agencies’ economic analyses

used to support the rules, to the general public participation requirements

in the rulemaking process.

A great deal of congressional attention and concern has recently been

focused on the economic analyses that agencies prepare in support of their

regulatory actions. Under Executive Order 12866, issued by President

Clinton in September 1993, covered agencies are required to submit their

“significant” rules to the Office of Management and Budget (OMB) before

publishing them in the Federal Register. Agencies are also required to

prepare a detailed economic analysis for any regulatory actions that are

“economically significant” (e.g., have an annual effect on the economy of

Congressional

Oversight Can Address

Some Regulatory

Concerns

Reviews Indicate Some

Agency Economic Analyses

Need Improvement
Statement

Regulatory Reform: Procedural and Analytical Requirements in Federal Rulemaking

Page 2 GAO/T-GGD/OGC-00-157

$100 million or more).1 According to the executive order, the analyses

should include an assessment of the costs and benefits anticipated from

the action as well as the costs and benefits of “potentially effective and

reasonably feasible alternatives to the planned regulation.” The order also

states that, in choosing among alternatives, an agency should select those

approaches that maximize net benefits and “base its decisions on the best

reasonably obtainable scientific, technical, economic, and other

information concerning the need for, and consequences of, the intended

regulation.”

In January 1996, OMB issued “best practices” guidance on preparing costbenefit analyses under the order. The guidance gives agencies substantial

flexibility regarding how the analyses should be prepared, but also

indicates that the analyses should contain certain basic elements and

should be “transparent”—disclosing how the study was conducted, what

assumptions were used, and the implications of plausible alternative

assumptions.

At the request of Members of Congress, we have examined agencies’

economic analyses both in our reviews of selected federal rules issued by

multiple agencies and in the context of particular regulatory actions. In

one of our reviews, we reported that some of the 20 economic analyses

from 5 agencies that we reviewed did not incorporate all of the best

practices set forth in OMB’s guidance.2

 Five of the analyses did not discuss

alternatives to the proposed regulatory action, and, in many cases, it was

not clear why the agencies used certain assumptions. Also, five of the

analyses did not discuss uncertainty associated with the agencies’

estimates of benefits and/or costs, and did not document the agencies’

reasons for not doing so. We recommended that OMB’s best practices

guidance be amended to provide that economic analyses should (1)

address all of the best practices or state the agency’s reason for not doing

so, (2) contain an executive summary, and (3) undergo an appropriate

level of internal or external peer review by independent experts.

In some cases, our congressionally-requested reviews of agencies’

regulatory analyses have resulted in changes to the associated rules. For

example, we reported last year on the scientific basis for the Food and

Drug Administration’s (FDA) proposed rule on dietary supplements

 

1

Similar economic analysis requirements had previously been in place under Executive Order 12291,

issued by President Reagan in 1981.

2

Regulatory Reform: Agencies Could Improve Development, Documentation, and Clarity of Regulatory

Economic Analyses (GAO/RCED-98-142, May 26, 1998).

Oversight of Analyses Can

Result in Changes to Rules
Statement

Regulatory Reform: Procedural and Analytical Requirements in Federal Rulemaking

Page 3 GAO/T-GGD/OGC-00-157

containing ephedrine alkaloids and the agency’s adherence to statutory

and executive order regulatory analysis requirements.3

 Although the

number and type of adverse event reports that FDA received warranted the

agency’s consideration of steps to address safety issues, we expressed

concerns about the strength of some of the information FDA used to

support two aspects of the proposed rule—the dosing level and duration of

use limits. We concluded that FDA generally complied with the statutory

and executive order requirements applicable to the rulemaking, but the

economic analysis that accompanied the rule did not reflect the full range

of uncertainty associated with the proposed rule. The agency did not

always disclose why certain key assumptions were made or the degree of

uncertainty involved in those assumptions. It also did not disclose that

alternative assumptions would have had a dramatic effect on the agency's

estimate of the benefits of the proposed actions. We recommended that

FDA obtain additional information to support conclusions regarding the

specific elements in the proposed rule before proceeding to final

rulemaking. We also recommended that FDA improve the transparency of

its cost-benefit analysis in its final rule. In April 2000, FDA announced that

it was withdrawing certain portions of its proposed rule “because of

concerns regarding the agency’s basis for proposing a certain dietary

ingredient level and a duration of use limit for these products.”4

In a review that we released earlier this year, we reported on the Federal

Emergency Management Agency’s (FEMA) plans to revise its regulations

pertaining to public assistance insurance requirements.5

 Although the rule

was economically significant, FEMA had not conducted an analysis of the

expected costs and benefits of the draft regulation before submitting it to

OMB for its review, and had not prepared a comprehensive analysis of

other alternatives. In response to our preliminary discussions with FEMA

about these issues, FEMA entered into a contract with a management

consulting firm to conduct a cost-benefit analysis and to examine and

assess alternative approaches. FEMA also began additional analysis of the

impact of its draft regulations on small entities in response to OMB’s

concerns about FEMA’s compliance with the Regulatory Flexibility Act.

Finally, FEMA decided to issue an advance notice of proposed rulemaking

before issuing the proposed rule.

 

3

Dietary Supplements: Uncertainties in Analyses Underlying FDA’s Proposed Rule on Ephedrine

Alkaloids (GAO/HEHS/GGD-99-90, July 2, 1999).

4

Federal Register, Vol. 65, No. 64 (Apr. 3, 2000), p. 17474.

5

Disaster Assistance: Issues Related to the Development of FEMA’s Insurance Requirements

(GAO/GGD/OGC-00-62, Feb. 25, 2000).
Statement

Regulatory Reform: Procedural and Analytical Requirements in Federal Rulemaking

Page 4 GAO/T-GGD/OGC-00-157

In some cases, we are asked to review and comment on agencies’

rulemaking approaches without specific reference to Executive Order

12866. For example, in response to a requirement in the Balanced Budget

Act of 1997, we issued a report in February 1998 evaluating a Health Care

Financing Administration (HCFA) proposed rule describing revisions to

fee schedules used to pay physicians in the Medicare program.6 We

concluded that the methodology that HCFA used to develop the fee

schedules was generally acceptable, but needed some modifications. In

June 1998, HCFA published its revised proposal, and published its final

rule in November 1998. Several Members of Congress then asked us to

monitor and report on HCFA’s new methodology. In a report issued last

year, we concluded that the new methodology was an acceptable

approach, and that it responded to several concerns we had with the

agency’s original approach.7

 Nevertheless, we said that certain questions

about the data and methodology needed to be addressed before full

implementation. We recommended that the Administrator of HCFA take

several actions to address our concerns.

Some of our reviews of agencies’ specific regulatory analyses have

clarified how the associated rules were developed or answered other

questions posed by congressional requesters, but did not conclude that the

agencies actions were deficient. These kinds of information-gathering

efforts are often crucial to ensure that Congress and the public understand

how regulations are developed, and the strength of the data, methodology,

and assumptions that underlie the rules. For example, in January 1998, we

reported on our review of the Environmental Protection Agency’s (EPA)

final rule that limited sulfur dioxide emissions from the Navajo Generating

Station by approximately 90 percent.8

 Specifically, we discussed the effect

of changes between the proposed and final rule on emissions reductions

and associated costs, how the agency determined the expected level of

visibility improvements, and how the agency estimated the monetary value

of those improvements.

In January 1999, we explained why there were significant differences

between EPA’s and the industry’s cost estimates of EPA’s proposed

 

6

Medicare: HCFA Can Improve Methods for Revising Physician Practice Expense Payments

(GAO/HEHS-98-79, Feb. 27, 1998).

7

Medicare Physician Payments: Need to Refine Practice Expense Values During Transition and Long

Term (GAO/HEHS-99-30, Feb. 24, 1999).

8

Air Pollution: Estimated Benefits and Costs of the Navajo Generating Station’s Emissions Limits

(GAO/RCED-98-28, Jan. 27, 1998).

Oversight of Analyses Can

Clarify Agencies’ Actions,

Answer Questions
Statement

Regulatory Reform: Procedural and Analytical Requirements in Federal Rulemaking

Page 5 GAO/T-GGD/OGC-00-157

pretreatment standards for industrial laundries.9 We also discussed how

EPA estimated the benefits of the proposed rule, uncertainties associated

with the accuracy of its estimates, and how EPA’s analysis supported the

agency’s belief that it had chosen the least costly, most cost-effective, or

least burdensome regulatory alternative.

The most long-standing and broadly applicable federal rulemaking

requirements are in the Administrative Procedure Act (APA) of 1946.

Among other things, the APA generally requires that agencies publish a

notice of proposed rulemaking (NPRM) in the Federal Register. After

giving “interested persons” an opportunity to comment on the proposed

rule, and after considering the public comments, the agency may then

publish the final rule. However, the APA says that the notice and comment

procedures generally do not apply when an agency finds, for “good cause,”

that those procedures are “impracticable, unnecessary, or contrary to the

public interest.” 10 When agencies use the good cause exception, the act

requires that they explicitly say so and provide a rationale for the

exception’s use when the rule is published in the Federal Register.

In August 1998, we reported that about half of the 4,658 final regulatory

actions published in the Federal Register during 1997 were issued without

NPRMs.11 Although most of the final actions without NPRMs appeared to

involve administrative or technical issues with limited applicability, some

were significant actions, and 11 were economically significant. Some of

the explanations that the agencies offered in the preambles to their rules

for using the good cause exception were not clear. For example, in several

cases, the preambles said that an NPRM was “impracticable” because of

statutory or other deadlines that had already passed by the time the rules

were issued. In other cases, the agencies asserted in the preambles that

notice and comment would delay rules that were, in some general way, in

the “public interest.” For example, in one such case, the agency said it was

using the good cause exception because the rule would “facilitate tourist

and business travel to and from Slovenia,” and therefore delaying the rule

to allow for public comments “would be contrary to the public interest.”

In another case, the agency said that soliciting public comments on the

 9

Water Pollution: Proposed Pretreatment Standards for Industrial Laundries (GAO/RCED-99-42R, Jan.

20, 1999).

10The APA also provides exceptions to the NPRM requirement for certain categories of regulatory

action (e.g., rules dealing with military or foreign affairs). It also says the notice and comment

procedures do not apply to interpretive rules; general statements of policy; or rules of agency

organization, procedure, or practice.

11Federal Rulemaking: Agencies Often Published Final Actions Without Proposed Rules (GAO/GGD-98-

126, Aug. 31, 1998).

Agency Explanations for

Use of the APA’s “Good

Cause” Exception Were

Sometimes Unclear
Statement

Regulatory Reform: Procedural and Analytical Requirements in Federal Rulemaking

Page 6 GAO/T-GGD/OGC-00-157

rule was “contrary to the public interest” because the rule authorized a

“new and creative method of financing the development of public

housing.”

When agencies publish final rules without NPRMs, the public’s ability to

participate in the rulemaking process is limited. Also, several of the

regulatory reform requirements that Congress has enacted during the past

20 years use as their trigger the publication of an NPRM. Therefore, it is

important that agencies clearly explain why notice and comment

procedures are not followed. We recommended in our report that OMB

notify executive departments and agencies that (1) their explanations in

the preambles to their rules should clearly explain why notice and

comment was impracticable, unnecessary, or not in the public interest, and

(2) that OMB would, as part of its review of significant final rules, focus on

those explanations.

We have also had an effect on agencies’ rulemaking actions as a result of

our responsibilities under the Congressional Review Act (CRA). For

example, under the CRA, before a final rule can become effective it must

be filed with the Congress and GAO. However, in 1998, we reported that

several hundred final rules had been published in the Federal Register but

had not been submitted to us. We then worked with the agencies and OMB

to correct the situation, and now virtually all of the rules that should have

been submitted are being filed.

A related problem has been determining whether certain documents

constitute “rules” that must be submitted in accordance with the CRA. For

example, in one case, EPA claimed that its interim guidance for

investigating complaints under title VI of the Civil Rights Act of 1964 was

not a “rule,” and therefore did not have to be submitted to the Congress

and GAO before it could become effective. We concluded that the

document was a rule because it clearly affected the rights of nonagency

parties, and therefore had to be submitted pursuant to the CRA’s

requirements.

Another problem related to the CRA has been the failure of some agencies

to delay the effective dates of their major rules for 60 days as required by

section 801(a)(3)(A) of the Act. Agencies were not budgeting enough time

into their regulatory timetable to allow for the delay and were

misinterpreting the “good cause” exception to the 60-day delay period

found in section 808(2) of the Act. We again worked with the agencies

and, as a result, agencies have been much less likely to erroneously avoid

the required 60-day delay.

Compliance With

Congressional Review Act

Requirements Has Been

Inconsistent
Statement

Regulatory Reform: Procedural and Analytical Requirements in Federal Rulemaking

Page 7 GAO/T-GGD/OGC-00-157

In each of the examples that I have cited, we were able to compare the

agencies’ rulemaking actions to statutory or executive order requirements

and determine whether the agencies’ actions satisfied the requirements.

However, some of the concerns that have been expressed about agencies’

compliance with rulemaking requirements appear traceable to the

requirements themselves. Some are not specific, giving the agencies broad

discretion to determine whether the mandated actions are applicable to

their rules. Other requirements apply to few rules and/or require little new

analysis for the rules to which they are applicable.

The Regulatory Flexibility Act (RFA) of 1980, enacted in response to

concerns about the effect that federal regulations can have on small

entities, is an example of a broadly-based rulemaking requirement. Under

the RFA, an agency must prepare an initial regulatory flexibility analysis at

the time proposed rules are issued unless the head of the agency

determines that the proposed rule would not have a “significant economic

impact upon a substantial number of small entities.” The act also requires

agencies to ensure that small entities have an opportunity to participate in

the rulemaking process, and requires the Chief Counsel of the Small

Business Administration’s (SBA) Office of Advocacy to monitor agencies’

compliance with the Act. The RFA was amended in 1996 by the Small

Business Regulatory Enforcement Fairness Act to, among other things,

require that EPA and the Occupational Safety and Health Administration

convene advocacy review panels before publishing an initial regulatory

flexibility analysis.

We have reported on the implementation of the RFA on several occasions

in the past, and a recurring theme in our reports is the varying

interpretation of the RFA’s requirements by federal agencies. For

example, in 1991, we reported that each of the four federal agencies that

we reviewed had a different interpretation of key RFA provisions.12 The

report pointed out that the RFA provided neither a mechanism to enforce

compliance with the act nor guidance on implementing it. We

recommended that Congress consider amending the RFA to require that

SBA develop criteria for whether and how federal agencies should conduct

RFA analyses.

In 1994 we examined the 12 SBA annual reports on agencies’ RFA

compliance that had been issued since 1980.13 The reports indicated that

 12Regulatory Flexibility Act: Inherent Weaknesses May Limit Its Usefulness for Small Governments

(GAO/HRD-91-16, Jan. 11, 1991).

13Regulatory Flexibility Act: Status of Agencies’ Compliance (GAO/GGD-94-105, Apr. 27, 1994).

Some Rulemaking

Requirements Are

Unspecific or Apply to

Few Rules

Regulatory Flexibility

Requirements Need

Clarification
Statement

Regulatory Reform: Procedural and Analytical Requirements in Federal Rulemaking

Page 8 GAO/T-GGD/OGC-00-157

agencies’ compliance with the RFA varied widely from one agency to

another, and that some agencies’ compliance varied over time. We noted

that the RFA does not expressly authorize SBA to interpret key provisions

of the statute, and does not require SBA to develop criteria for agencies to

follow in reviewing their rules. As a result, different rulemaking agencies

were interpreting the statute differently. We said that if Congress wanted

to strengthen the implementation of the RFA it should consider amending

the act to provide SBA with clearer authority and responsibility to

interpret the RFA’s provisions and require SBA to develop criteria on

whether and how agencies should conduct RFA analyses.

We essentially repeated this recommendation in our 1998 report on the

implementation of the small business advocacy review panel requirements,

noting that Congress should provide SBA or another entity with

interpretive authority and responsibility.14 We said that the lack of clarity

regarding whether EPA should have convened review panels for its two

proposed rules on ozone and particulate matter was traceable to the lack

of agreed-upon government criteria for whether a rule has a “significant

economic impact on a substantial number of small entities” under the RFA.

Similarly, we concluded in our 1999 report on the review requirements in

section 610 of the RFA that the agencies we reviewed differed in their in

their interpretation of those review requirements.15 We said that if

Congress was concerned about these varying interpretations it might wish

to consider clarifying those provisions.

Executive Order 12612 on “Federalism,” issued by President Reagan in

1987, also gave federal agencies broad discretion to determine its

applicability. The executive order required the head of each federal

agency to designate an official to be responsible for determining which

proposed policies (including regulations) had “sufficient federalism

implications” to warrant preparation of a federalism assessment. If the

designated official determined that such an assessment was required, it

had to accompany any proposed or final rule submitted to OMB for review.

We examined the preambles of more than 11,000 final rules that federal

agencies issued between April 1996 and December 1998 to determine how

often they mentioned the executive order and how often the agencies

 

14Regulatory Reform: Implementation of the Small Business Advocacy Review Panel Requirements

(GAO/GGD-98-36, Mar. 18, 1998).

15Regulatory Flexibility Act: Agencies’ Interpretations of Review Requirements Vary (GAO/GGD-99-55,

Apr. 2, 1999).

Federalism Executive Order

Had Little Effect on

Rulemaking
Statement

Regulatory Reform: Procedural and Analytical Requirements in Federal Rulemaking

Page 9 GAO/T-GGD/OGC-00-157

indicated that they had prepared a federalism assessment.16 Our work

indicated that Executive Order 12612 had relatively little visible effect on

federal agencies’ rulemaking actions during this time frame. The

preambles to only 5 of the more than 11,000 rules indicated that the

agencies had conducted a federalism assessment.

Most of these rules were technical or administrative in nature, but 117

were economically significant rules. However, the agencies prepared a

federalism assessment for only one of these economically significant rules.

The lack of assessments for these rules is particularly surprising given that

the agencies had previously indicated that 37 of the rules would affect

state and local governments, and said that 21 of them would preempt state

and local laws in the event of a conflict.

Federal agencies had broad discretion under Executive Order 12612 to

determine whether a proposed policy has “sufficient” federalism

implications to warrant the preparation of a federalism assessment. Some

agencies have clearly used that discretion, to establish an extremely high

threshold. For example, in order for an EPA rule to require a federalism

assessment, the agency’s guidance said that the rule must, among other

things, have an “institutional” effect on the states (not just a financial

effect), and affect all or most of the states in a direct, causal manner.

Under these standards, an EPA regulation that has a substantial financial

effect on all states, but does not affect the “institutional” role of the states,

would not require a federalism assessment.

Executive Order 12612 was revoked by President Clinton’s Executive

Order 13132 on “Federalism,” which was issued August 4, 1999, and took

effect on November 2, 1999. Like the old executive order, the new order

provides agencies with substantial flexibility to determine which of their

actions have “federalism implications” and, therefore, when they should

prepare a “federalism summary impact statement.”

The Unfunded Mandates Reform Act (UMRA) is another example of a

regulatory requirement that has had little effect on agency rulemaking.

For example, title II of UMRA generally requires covered federal agencies

to prepare written statements containing specific information for any rule

for which a proposed rule was published that includes a federal mandate

that may result in the expenditure of $100 million or more in any 1 year by

state, local, and tribal governments, in the aggregate, or the private sector.

 

16Federalism: Previous Initiatives Have Had Little Effect on Agency Rulemaking (GAO/T-GGD-99-31,

June 30, 1999).

UMRA Had Little Effect on

Rulemaking
Statement

Regulatory Reform: Procedural and Analytical Requirements in Federal Rulemaking

Page 10 GAO/T-GGD/OGC-00-157

The statute defined a “mandate” as not including conditions imposed as

part of a voluntary federal program or as a condition of federal assistance.

We examined the implementation of title II of UMRA during its first 2 years

and concluded that it appeared to have only limited direct impact on

agencies’ rulemaking actions.17 Most of the economically significant rules

promulgated during that period were not subject to the act’s requirements

for a variety of reasons (e.g., no proposed rule, or the mandates were a

condition of federal assistance or part of a voluntary program). There

were only two rules without an UMRA written statement that we believed

should have had one (EPA’s proposed national ambient air quality

standards for ozone and particulate matter), but even in those rules we

believed that the agency had satisfied the substantive UMRA written

statement requirements. Also, title II contains exemptions that allowed

agencies not to take certain actions if they determined that they were

duplicative or not “reasonably feasible.” The title also required agencies to

take certain actions that they already were required to take or had

completed or that were already under way.

In some cases, concerns expressed by regulated entities about

burdensome regulations are traceable to the statutes underlying the

regulations, rather than a failure of the agency to comply with rulemaking

requirements. For example, in November and December 1996, we

reported what officials from 15 private sector companies said were the

federal regulations that were most problematic for their businesses.18 Our

reports also listed responses from the 19 federal agencies that issued the

regulations underlying the 125 company concerns. In about one-quarter of

the cases, the agencies indicated that the companies’ concerns were, at

least in part, attributable to statutory requirements underlying their

regulations.

We analyzed the particular statutes in question and, in a January 1999

report, concluded that the statutes underlying about half of the concerns

gave the rulemaking agencies no discretion in establishing the regulatory

requirements at issue; the statutes underlying most of the other concerns

gave the agencies only some discretion. 19 In cases where the underlying

 

17Unfunded Mandates: Reform Act Has Had Little Effect on Agencies’ Rulemaking Actions (GAO/GGD98-30, Feb. 4, 1998).

18Regulatory Burden: Measurement Challenges and Concerns Raised by Selected Companies

(GAO/GGD-97-2, Nov. 18, 1996); and Regulatory Burden (GAO/GGD-97-26R, Dec. 11, 1996).

19Regulatory Burden: Some Agencies’ Claims Regarding Lack of Rulemaking Discretion Have Merit

(GAO/GGD-99-20, Jan. 8, 1999).

Agencies Sometimes

Have Little Rulemaking

Discretion
Statement

Regulatory Reform: Procedural and Analytical Requirements in Federal Rulemaking

Page 11 GAO/T-GGD/OGC-00-157

statute is the source of regulatory burden, regulatory reform initiatives

focused on the agencies (e.g., cost-benefit analysis requirements) are

unlikely to have much direct effect on the burden that those agencies

impose.

In summary, Madam Chairwoman, oversight alone of the regulatory

process cannot, as we have learned, change agency behavior where the

underlying statutes and executive orders do not clearly compel desired

policies, procedures, or results. On the other hand, the examples of

agency regulations that we have reviewed also demonstrate that

congressional oversight can be an effective approach to ensure that

agencies’ rules are carefully developed and permit participation by the

public in the rulemaking process. The examples also illustrate the

difficulties involved in that endeavor. Agencies’ rules are often highly

technical, and the data, methodologies, scientific studies, and economic

analyses that agencies use to develop those rules are frequently

voluminous and extremely difficult to understand. The subject matter

involved in these rules ranges from the health effects of environmental and

occupational contaminants to the rates at which physicians are paid in the

Medicare program. Therefore, it is not surprising that there are proposals

to establish an independent source of analysis to evaluate agencies’

development of significant regulations.

Although Congress could, theoretically, ask the agencies themselves to

provide the information they need for oversight, the agencies are hardly an

unbiased source of information about their own rules. Although OMB

reviews every significant rule covered by Executive Order 12866 and has a

wealth of expertise on rulemaking issues, its primary mission is to support

the policies and goals of the President. As we said last year in our analysis

of OMB’s reports on the costs and benefits of all federal rules, OMB cannot

realistically be expected to alter or dispute the administration’s own

estimates of regulatory costs and benefits in a report to Congress.20

Therefore, if Congress wants an independent assessment of regulatory

costs and benefits, it should consider assigning that responsibility to an

organization outside of the executive branch. As the examples that I

previously cited illustrate, Congress has, on an occasional basis, requested

that we perform that function. Legislation that was recently passed by the

Senate, and other proposals introduced by you, Madam Chairwoman, and

others in the House, would regularize that analytic responsibility. While

 

20Regulatory Accounting: Analysis of OMB’s Reports on the Costs and Benefits of Federal Regulation

(GAO/GGD-99-59, Apr. 20, 1999).

Congress Needs

Assistance to Perform

Regulatory Oversight
Statement

Regulatory Reform: Procedural and Analytical Requirements in Federal Rulemaking

Page 12 GAO/T-GGD/OGC-00-157

we stand ready to assist Congress in carrying out its oversight

responsibility, our ability to successfully do so will depend on (1) the

scope of the analysis contemplated, (2) the number of requests that we

receive, (3) the time allotted to perform the reviews, and (4) the resources

that we are given to accomplish the tasks involved. These subjects are not

strictly the focus of this hearing, but we would be happy to meet with

Members and staff of the Subcommittee to discuss this possible legislation.

 - - - - - -

Madam Chairwoman, this completes my prepared statement. I would be

pleased to answer any questions.
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