United States General Accounting Office

GAO Report to Congressional Requesters

November 1996 REGULATORY

BURDEN

Measurement

Challenges and

Concerns Raised by

Selected Companies

G O A

years

1921 - 1996

GAO/GGD-97-2

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-260085 

November 18, 1996

The Honorable Ted Stevens

Chairman

The Honorable John Glenn

Ranking Minority Member

Committee on Governmental

 Affairs

United States Senate

The Honorable Peter Hoekstra

Chairman, Subcommittee on Oversight

 and Investigations

Committee on Economic and Educational

 Opportunities

House of Representatives

The Honorable Don Nickles

United States Senate

The Honorable Amory Houghton, Jr.

House of Representatives

This report responds to your requests that we obtain information on the impact of federal

regulations on businesses. Specifically, we were asked to describe (1) what selected businesses

and federal agencies believed were the federal regulations that applied to those businesses,

(2) what those businesses believed was the impact (cost and other) of those regulations, and

(3) the regulations those businesses said were most problematic to them and relevant federal

agencies’ responses to those concerns.

We are sending copies of the report to the Director of the Office of Management and Budget’s

Office of Information and Regulatory Affairs. Copies will also be made available to others upon

request.

If you have any questions about this report or would like to discuss it further, please contact me

on (202) 512-8676. Major contributors to this report are listed in appendix III.

L. Nye Stevens

Director, Federal Management

 and Workforce Issues
Executive Summary

Purpose The process of issuing and enforcing regulations is one of the basic tools

of government. However, measurement of the effects of regulation on the

economy is imprecise and controversial. Some analysts have claimed that

federal regulations cost the economy hundreds of billions of dollars each

year. However, others question these claims or assert that regulations

provide even greater benefits.

Because of their interest in regulatory issues, five Members of Congress

asked GAO to investigate the cumulative impact of federal regulations on a

limited number of businesses. In this report, GAO attempted to identify the

impact of federal regulations on those businesses by asking the businesses

to identify which regulations applied to them, the costs and other impacts

of those regulations, and the regulations that were most problematic. GAO

also attempted to gather information from regulatory agencies regarding

the regulations applicable to the businesses and the regulations the

businesses viewed as problematic. Although the businesses did not

provide all of the information GAO requested, the results illustrated the

inherent difficulties associated with measuring aggregate regulatory

burden.

Background Regulations generally start with an act of Congress. They are issued by

executive or independent agencies as the means by which statutes are

transformed into specific requirements. Today, federal regulations in such

areas as the environment, public health, the economy, consumer

protection, and workplace safety affect virtually everyone’s lives.

Some business groups and individual companies have complained that the

cumulative impact of these requirements at the company level has

imposed too great a burden on business operations. Congress has

responded to these complaints through passage of the Paperwork

Reduction Acts of 1980 and 1995, the Regulatory Flexibility Act of 1980,

the Unfunded Mandates Reform Act of 1995, and the Small Business

Regulatory Enforcement Fairness Act of 1996, which provides an

expedited procedure by which Congress can review and possibly

disapprove agencies’ regulations. The executive branch has also initiated

several efforts to make the federal regulatory process less burdensome on

business.

Results in Brief Most of the business associations and other groups that GAO contacted did

not nominate companies to participate in its review of the impact of

Page 2 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Executive Summary

federal regulations. Also, most of the companies that GAO contacted on its

own declined to participate in the study. Ultimately, GAO worked with 15

companies that were willing to provide information.

None of the 15 companies developed a complete list of regulations that

were applicable to them. Time and resource constraints and the difficulty

of disentangling federal regulatory requirements from those of other

jurisdictions and other nonregulatory procedures proved to be major

obstacles for the companies. Most federal regulatory agencies also said

that they could not detail which regulations applied to a particular

company without a great deal of company-specific information and the

expenditure of a substantial amount of resources.

Likewise, none of the companies provided comprehensive data on the cost

of regulatory compliance. This inability to provide such data was partially

a function of the difficulty companies faced in identifying all applicable

regulations. Companies also found it difficult to identify their incremental

compliance costs, i.e., costs that would not have been borne in the

absence of federal regulation. No company had a database capable of

capturing incremental costs, probably because there is no regular business

use for such data.

GAO’s work suggests that measuring the incremental impact of all federal

regulations on individual companies, although perhaps not impossible, is

an extremely difficult endeavor. Therefore, decisionmakers using studies

that attempt to measure total current regulatory costs to guide public

policy need to be aware of those studies’ conceptual and methodological

underpinnings.

Many of the 15 participating companies recognized that regulations

provide benefits to society and their own businesses. However, all of the

companies provided GAO with a varied list of concerns about regulatory

costs and the regulatory process. These concerns included perceptions of

high compliance costs; unreasonable, unclear, and inflexible demands;

excessive paperwork; and a tendency of regulators to focus on

deficiencies.

The agencies responsible for the regulations the companies viewed as

problematic often said that the companies misinterpreted the regulatory

requirements, indicating that communications between regulators and the

companies GAO reviewed had not always been effective. The agencies and

some Members of Congress do not always agree on the extent to which

Page 3 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Executive Summary

problematic regulations are statutorily driven. This suggests that

opportunities exist for improved communication between Congress and

the agencies about the statutory basis of agencies’ rules. Recently enacted

congressional review procedures in the Small Business Regulatory

Enforcement Fairness Act have the potential to improve those

communications. Finally, the agencies also said that they were aware of

and were responding to a number of the companies’ concerns.

Principal Findings

Many Companies Were

Reluctant to Participate

GAO had difficulty locating companies willing to participate in the review.

Seven of nine business and public interest groups GAO contacted did not

nominate any companies to participate. Of 51 companies GAO identified,

mostly through public sources, as having views on the impact of

regulations, 17 agreed to participate in the study and 15 eventually

provided views and data. Ten of those 15 companies requested anonymity.

Many of the companies that declined to participate in the study cited a

lack of time or resources or said they did not have the types of data GAO

was seeking. (See ch. 1.)

Companies and Agencies

Had Difficulty Developing

Lists of Applicable

Regulations

Although nearly all of the companies participating in the study initially told

GAO they could develop a complete list of applicable regulations,

ultimately, none did so. The task proved to be a substantial burden to the

companies, and most cut the effort short citing limited resources and

higher priorities. Several companies also found that their efforts to

develop a comprehensive list of regulations were hampered because many

regulations had become part of the everyday operations of the company.

Other companies found it difficult to separate federal regulations from

those of other governmental jurisdictions. One company was reluctant to

characterize its list as complete because it may have exposed the company

to suspicions that it was failing to observe some applicable requirements.

GAO found that federal regulatory agencies themselves had difficulty

determining the applicability of their regulations to particular companies

without a detailed knowledge of the companies’ situation and affairs.

Several agencies noted that such an effort would use too many scarce

resources and pointed to extensive amounts of information they made

available to the public so that businesses themselves could determine their

Page 4 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Executive Summary

regulatory responsibilities. However, GAO observed that the sources of

information often appeared to be fragmented both within and across

agencies. GAO also determined that the regulations applicable to two

companies from three agencies varied, but, in the aggregate, were

substantial. (See ch. 2.)

Companies Lacked Data on

Regulatory Costs

In its efforts to collect comprehensive data on the direct costs of

compliance with federal regulations, GAO encountered a number of

obstacles. First, the companies did not provide a complete inventory of

applicable federal regulations that could then be used to determine

associated costs. Also, the companies generally did not identify the

incremental costs that were attributable to regulatory requirements

because they could not determine what costs they would have incurred in

the absence of regulations. The companies’ financial information systems

were not geared to identifying costs associated with regulations. No

business purpose would be served by such information, and collecting it

regularly would be a substantial incremental cost in itself. Indirect costs,

such as lost productivity, construction delays, and misallocation of

resources, are even more difficult to measure than direct costs.

Several frequently cited studies have attempted to measure aggregate

regulatory costs. For example, a 1993 study estimated that the cost to the

economy would be $607 billion in 1995. However, some elements of this

analysis have been questioned by economists and others.

GAO’s work indicated that, although perhaps not impossible, measuring the

incremental cost of all regulations on even a single business is very

difficult. Therefore, users of aggregate regulatory cost studies need to be

aware of the inherent difficulties and assumptions involved in producing

such measures. Questions need to be raised and answered regarding

which regulations are included in the studies and whether they focus on

incremental costs. (See ch. 3.)

Companies Recognized

Some Benefits to

Regulation

Despite concerns the businesses expressed about the costs of regulatory

compliance, most company officials recognized that regulations provide

not only benefits to society but also, in certain cases, to their own

businesses. For example, a glass company said federal regulations had

opened up new markets for the company. They and officials from other

companies also said that federal regulations provide a level playing field

Page 5 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Executive Summary

for businesses operating in multiple states, making compliance easier and

less costly. (See ch. 3.)

Common Themes

Concerning Problematic

Regulations and

Enforcement

The 15 companies cited more than 100 specific concerns about the

regulatory process. GAO grouped these concerns into 10 broad themes,

such as the high cost of compliance, the unreasonableness or inflexibility

of certain regulations, excessive paperwork, the unclear nature of certain

regulatory requirements, severe regulatory penalties, a “gotcha”

enforcement approach, and poorly coordinated requirements among

agencies and between governmental jurisdictions.

Regulatory agencies responding to these concerns often said that the

companies mischaracterized, misstated, or misinterpreted the regulations

involved, suggesting a breakdown in communication between the

companies and the agencies. Because of these misunderstandings, the

agencies sometimes indicated that the companies were incurring

unnecessary expenses. The agencies also said that they were taking or

already had taken action to alleviate some of the problems that the

companies cited. These actions suggest that a variety of regulatory reform

initiatives are currently under way within the federal government. Finally,

opportunities appear to exist for improved communication between

Congress and the agencies regarding the statutory basis of agencies’ rules.

The agencies said that many of the companies’ concerns were driven by

statutory requirements underlying the regulations. However, some

Members of Congress believe that certain agencies have promulgated

regulations that go beyond the intent of Congress. This perception, in part,

led to the establishment of the Small Business Regulatory Enforcement

Fairness Act’s expedited congressional regulatory review procedures,

which may serve as a vehicle for improved congressional-agency

communications. (See ch. 4.)

Recommendations GAO is making no recommendations in this report.

Agency Comments

and Our Evaluation

GAO invited comments on a draft of this report from the Administrator of

the Office of Management and Budget’s Office of Information and

Regulatory Affairs as well as top officials or their designees in 19 federal

departments and agencies responsible for the companies’ federal

regulatory concerns. The Office of Information and Regulatory Affairs and

6 of the other 19 departments and agencies said that they had no

Page 6 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Executive Summary

comments on the report. Most of the other agencies suggested technical

corrections or additions of text, which were incorporated as appropriate.

Overall, the agencies indicated that the report was an accurate

characterization of their regulatory operations and their positions

regarding the companies’ concerns.

Page 7 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Contents

Executive Summary 2

Chapter 1 

Introduction

12

Background 12

Objectives, Scope, and Methodology 18

Chapter 2 

Companies and

Agencies Had

Difficulty Developing

Lists of Applicable

Regulations

27

None of the Companies Provided a Complete List of Regulations 27

Agencies Had Difficulty Providing Lists of Applicable Regulations 30

Conclusions 43

Chapter 3 

Companies Lacked

Data on Regulatory

Costs

45

Measures of Regulatory Costs Vary 45

Companies Generally Could Not Provide Comprehensive,

Incremental Cost Data

48

Indirect Costs of Federal Regulations 52

The Benefits of Federal Regulations 53

Conclusions 55

Chapter 4 

Companies’

Regulatory Concerns

Focused on

Regulations and

Regulators

57

Companies Expressed Concerns About Regulations and

Regulators’ Actions

58

Companies Suggested Ways to Address Regulatory Problems and

Improve Relations With Regulators

70

Conclusions 72

Chapter 5 

Overview and

Conclusions

74

Cost of Regulations Is Difficult to Determine 76

Agencies Said Many Regulatory Concerns Are Being Addressed 77

Communication Between Businesses, Regulatory Agencies, and

Congress Is Not Always Effective

79

Appendixes Appendix I: Business Interview Guide: Instructions and Data

Collection Instrument

86

Page 8 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Contents

Appendix II: Companies’ Concerns About Regulatory Issues and

Agencies’ Responses

97

Appendix III: Major Contributors to This Report 124

Related GAO Products 127

Table Table 1.1: Number of Companies Participating in the GAO

Review, by Industry Category and Size

22

Abbreviations

ADA Americans with Disabilities Act

ADEA Age Discrimination in Employment Act

BSA Bank Secrecy Act

BSR Business for Social Responsibility

CAA Clean Air Act

CFR Code of Federal Regulations

CMA Chemical Manufacturers Association

CWA Clean Water Act

DOJ Department of Justice

DOL Department of Labor

DOT Department of Transportation

EEOC Equal Employment Opportunity Commission

EPA Environmental Protection Agency

EPCRA Emergency Planning and Community Right-to-Know Act

ERISA Employee Retirement Income Security Act of 1974

ESA Employment Standards Administration

FAA Federal Aviation Administration

FDA Food and Drug Administration

FDIC Federal Deposit Insurance Corporation

FinCEN Financial Crimes Enforcement Network

FMLA Family and Medical Leave Act

FRB Federal Reserve Board

GEMI Global Environmental Management Initiative

HCFA Health Care Financing Administration

HHS Department of Health and Human Services

HUD Department of Housing and Urban Development

IRS Internal Revenue Service

NAM National Association of Manufacturers

NESHAP National Emissions Standards for Hazardous Air Pollutants

NFIB National Federation of Independent Businesses

NPDES National Pollutant Discharge Elimination System

Page 9 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Contents

OCC Office of the Comptroller of the Currency

OFCCP Office of Federal Contract Compliance Programs

OIRA Office of Information and Regulatory Affairs

OMB Office of Management and Budget

OSHA Occupational Safety and Health Administration

PBGC Pension Benefit Guaranty Corporation

PWBA Pension and Welfare Benefits Administration

RCRA Resource Conservation and Recovery Act

SBA Small Business Administration

SEC Securities and Exchange Commission

SPCC Spill Prevention, Control, and Countermeasures

TSCA Toxic Substances Control Act

USSC United States Sentencing Commission

Page 10 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Page 11 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 1 

Introduction

The process of issuing and enforcing regulations is one of the basic tools

of government, and the process has generated considerable controversy.

Some individuals and organizations have called for increasing regulation

of businesses and other nonfederal entities to achieve certain goals, such

as fairer competition, cleaner water, or safer consumer products and

services. Others have recommended drastic reductions in federal

regulatory activity and/or the imposition of constraints on how agencies

develop or implement regulations, often because of the burden associated

with regulatory compliance and questions about whether the regulations

are actually achieving their stated purposes.

A number of studies have attempted to analyze the effect of federal

regulations on businesses or the economy as a whole, with some analysts

claiming that federal regulations cost the economy hundreds of billions of

dollars each year. Although these estimates are frequently cited,

measurement of the effects of regulation on the economy is imprecise and

controversial. Also, relatively little is known about the impact of all

regulations on individual businesses or even how many regulations apply

to a business. This type of information about the impact of regulations on

individual businesses would provide a better understanding of the impact

of regulations on the economy as a whole.

Background Regulations generally start with an act of Congress and serve as the means

by which statutes are implemented and specific requirements are

established. These requirements tell people and businesses what must be

done to comply with the law. The statutory basis for a regulation can vary

dramatically, from (1) very broad grants of authority that state only the

general intent of the legislation and leave agencies with a great deal of

discretion as to how that intent should be implemented to (2) very specific

requirements delineating what regulatory agencies should do and how

they should do it.

The Agricultural Adjustment Act is an example of a broad grant of

authority, delegating to the Secretary of Agriculture wide discretion to

make agricultural marketing “orderly.” The statute provides little guidance

on which crops should have marketing orders or how to apportion the

market among growers.

The toxic air provisions of the Clean Air Act Amendments of 1990 are

examples of very specific statutory requirements. The provisions specified

that the Environmental Protection Agency (EPA) establish standards, on

Page 12 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 1 

Introduction

the basis of the best existing pollution control technologies, for major

sources of 189 of the most prevalent and hazardous air pollutants. The

provisions also established three interim milestones and a final milestone

for setting the standards and specified certain consequences if EPA missed

a milestone for any source category. Likewise, in the Safe Drinking Water

Act Amendments of 1986, Congress specified 83 contaminants for which

EPA was to promulgate standards within 3 years. The act also required EPA

to regulate drinking water contaminants to be as close as technically

feasible to a level at which no known or anticipated health effects occur.1

The federal government has long regulated economic activity, often

through independent regulatory agencies established separate from

traditional federal departments and agencies.2

 Social regulation in such

areas as environmental quality, workplace safety, and consumer

protection is a relatively recent phenomenon. Beginning in the 1960s, a

number of major new statutes were enacted in those areas, including

amendments to the Clean Air Act (CAA) and the Clean Water Act (CWA), the

Toxic Substances Control Act (TSCA), the Resource Conservation and

Recovery Act (RCRA), the Occupational Safety and Health Act, the Truth in

Lending Act, and the Consumer Product Safety Act. Those and other acts,

as well as executive orders, also created new regulatory agencies, such as

EPA, the Occupational Safety and Health Administration (OSHA), the

National Highway Traffic Safety Administration, and the Consumer

Product Safety Commission. By the 1980s, an array of federal regulations

were in place that affected many decisions made by American businesses.

Concerns then began to be raised about whether the benefits these

regulations and regulatory agencies were attempting to achieve were

worth the costs associated with compliance. Concerns were also being

raised about the cumulative effect of all federal regulations on individual

businesses.

Rulemaking Process The basic rulemaking process is spelled out in section 553 of the

Administrative Procedure Act, which, among other things, generally

requires agencies to (1) publish notice of a proposed rulemaking in the

Federal Register; (2) allow interested persons an opportunity to

participate in the rulemaking by providing “written data, views, or

arguments”; and (3) publish the rule 30 days before it becomes effective.

1

Approaches for Environmental Regulations (GAO/RCED-96-135R, Apr. 25, 1996).

2

The first of these agencies was the Interstate Commerce Commission, established in 1887. Other

independent regulatory agencies include the Securities and Exchange Commission and the Federal

Communications Commission.

Page 13 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 1 

Introduction

Other procedural rulemaking requirements have been added through

general statutes, executive orders, and judicial decisions.3

 For example,

certain executive orders since 1981 have required agencies (other than

those considered to be independent regulatory agencies) to submit at least

their significant regulations to the Office of Management and Budget (OMB)

for its review before publication in the Federal Register. Because of the

numerous processes involved, federal rulemaking can take years to

complete.4

 Once completed, federal regulations are compiled in the Code

of Federal Regulations (CFR).

Regulatory Reform Efforts Numerous attempts have been made legislatively and by the executive

branch to reform federal regulatory processes. For example, Congress

enacted the following two regulatory reform initiatives in 1980: (1) the

Paperwork Reduction Act and (2) the Regulatory Flexibility Act. As its

name implies, the Paperwork Reduction Act attempted to minimize the

paperwork and reporting burdens agencies impose on nonfederal entities.

The act also established the Office of Information and Regulatory Affairs

(OIRA) within OMB to review and approve all agency information collection

activities. The Regulatory Flexibility Act required agencies to assess the

impact of their regulations on small entities (e.g., businesses and

governments) and to publish their plans for new regulations. We have

reported on the effects these laws have had on agencies’ regulatory

programs and recommended improvements to their design and

implementation.5

During the 104th Congress, numerous legislative initiatives have been

introduced that attempted to reform the regulatory process and/or reduce

businesses’ regulatory burden. As of July 1996, at least three major

governmentwide reform initiatives had been enacted. The Unfunded

Mandates Reform Act of 1995 established a mechanism for advising

Congress of the nature and size of federal mandates in proposed

legislation or regulations to allow congressional consideration of the

appropriateness of such mandates on state, local, or tribal governments or

3

These include the Freedom of Information Act; the Government in the Sunshine Act; Dole v. United

Steelworkers of America, 494 U.S. 26 (1990), which was effectively overturned by the Paperwork

Reduction Act of 1995; as well as other statutes and orders discussed later.

4

We reported in Clean Air Rulemaking: Tracking System Would Help Measure Progress of Streamlining

Initiatives (GAO/RCED-95-70, Mar. 2, 1995) that EPA rulemaking took, on average, 3 years to complete

at the time of the Clean Air Act Amendments of 1990. Some rules took as long as 9 years to complete.

5

Paperwork Reduction Act: Opportunity to Strengthen Government’s Management of Information and

Technology (GAO/T-AIMD/GGD-94-126, May 19, 1994); Regulatory Flexibility Act: Status of Agencies’

Compliance (GAO/GGD-94-105, Apr. 27, 1994); and Paperwork Reduction: Burden Reduction Goal

Unlikely To Be Met (GAO/T-GGD/RCED-96-186, June 5, 1996).

Page 14 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 1 

Introduction

the private sector. As part of that process, agencies are required to assess

the anticipated costs and benefits of federal mandates. The Paperwork

Reduction Act of 1995 reaffirmed the principles of the 1980 Act, required

OIRA to establish governmentwide and agency-specific paperwork

reduction goals, redefined key terms such as “collection of information,”

and required agencies to establish their own paperwork review and

clearance function. The Small Business Regulatory Enforcement Fairness

Act of 1996 made several changes in regulatory procedures, including

(1) amending the Regulatory Flexibility Act to allow for judicial review of

agency decisions, (2) requiring the publication of “small entity compliance

guides” to explain the actions a small business or other small entity must

take to comply with a rule or a group of rules, and (3) establishing a

congressional review process through which Congress can disapprove of

final agency regulations. Some Members of Congress viewed this review

process as necessary because they believed some agencies had issued

regulations that went beyond the intent of Congress when it passed the

underlying statutes.

Every president in recent years also has taken steps intended to reduce the

burden of federal regulations. In 1981, President Reagan issued Executive

Order 12291, which gave OMB the authority to review all new regulations

for consistency with administration policies. The order also required

agencies to prepare a “regulatory impact analysis” for each major rule,

describing the costs, benefits, and alternatives to the rule. In 1985,

President Reagan issued Executive Order 12498, which required agencies

subject to Executive Order 12291 to submit a list of significant regulatory

actions they expected to propose during the upcoming year to OMB for

clearance. The President also established a Task Force on Regulatory

Relief, headed by then Vice President Bush. In turn, President Bush named

his Vice President to head the Competitiveness Council, which was

charged with advocating regulatory relief for business. In 1992, President

Bush sent a memorandum to all federal departments and agencies calling

for a 90-day moratorium on new proposed or final rules. During the

moratorium, agencies were “. . . to identify and accelerate action on

initiatives that will eliminate any unnecessary regulatory burden or

otherwise promote economic growth.”

The Clinton administration has also made a number of attempts to reform

the federal regulatory process. Issued in September 1993, Executive Order

12866 revoked Executive Orders 12291 and 12498 and, among other things,

established a number of “principles of regulation” (e.g., use the best

scientific, technical, economic, or other information; specify performance

Page 15 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 1 

Introduction

objectives, not behaviors; make regulations simple and easy to

understand; and use cost-benefit analysis and risk assessment) and

reaffirmed the role of OMB in the regulatory review process (although only

for “significant” rules).6

 Vice President Gore’s National Performance

Review also made a number of recommendations to improve the

regulatory process, including (1) encouraging innovative regulatory

approaches and negotiated rulemaking; (2) streamlining agency

rulemaking procedures; and (3) ranking the seriousness of environmental,

health, or safety risks.7

 In March 1995, the President reiterated his interest

in regulatory reform, calling on all agencies to (1) conduct a page-by-page

review of all their regulations and eliminate or revise those outdated or in

need of reform; (2) change the performance measures of agencies and

regulators to focus on results, not process and punishment; (3) convene

groups of regulators and the people affected by their regulations around

the country and create “grassroots partnerships”; and (4) expand their

efforts to promote consensual rulemaking.

During 1995 and early 1996, the President also announced regulatory

reform initiatives aimed at certain agencies or issues (e.g., the

environment, pensions, and cancer drugs) and announced other reforms

applicable to all federal agencies. For example, agencies were asked to

halve many of their reporting requirements, reduce penalties for

self-disclosed violations of certain regulations, and allow companies to

change processes for certain low-risk manufacturing operations without

agency preapproval.

Measures of Regulatory

Activity/Burden

The level of federal regulatory activity, and the burden placed on

businesses and others as a result of that activity, has been measured in a

number of ways. For example, a number of commentors have used

relatively simple, easy-to-understand indicators, such as the number of

pages in the CFR, the length of the CFR on the bookshelf, the total weight of

the rules, and even the length of all of the rules if each sheet of paper were

6

Executive Order 12866 also contained “general requirements” for rulemaking, such as maximization of

the net benefits to society and selection of the least costly regulatory alternatives. For an evaluation of

certain elements of Executive Order 12866, see Regulatory Reform: Implementation of the Regulatory

Review Executive Order (GAO/T-GGD-96-207, Sept. 25, 1996).

7

From Red Tape to Results: Creating a Government That Works Better and Costs Less, report of the

National Performance Review, Vice President Al Gore, Sept. 7, 1993, pp. 167 and 168, and the

accompanying report Improving Regulatory Systems, September 1993. We commented on those

recommendations in Management Reform: Implementation of the National Performance Review’s

Recommendations (GAO/OCG-95-1, Dec. 5, 1994), pp. 516-527.

Page 16 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 1 

Introduction

placed end to end.8 Others have characterized federal regulatory burden in

terms of federal spending on regulatory programs or the number of federal

employees assigned to regulatory activities.9

 Although these types of

measures are relatively easy to develop and are appealing in some

respects, they are at best only relative and indirect measures of regulatory

burden and may not accurately reflect the difficulties experienced by the

public or individual businesses in complying with federal regulations.

These measures also require careful interpretation.10

Another indicator of regulatory burden that some analysts have used is the

number of hours federal agencies estimate are needed to fill out their

required paperwork.11 Although a more direct measure of regulatory

burden than the measures previously described, a paperwork hour

estimate has several limitations as a measure of overall regulatory burden.

First, paperwork is but one element of the overall burden of federal

regulations, and paperwork burden does not include other potentially

relevant factors, such as labor costs unrelated to paperwork or capital

expenditures. Second, paperwork burden is generally considered to be

inaccurately measured. Not all paperwork burden is always counted in the

data that agencies submit pursuant to the Paperwork Reduction Act, and

many believe that the paperwork burden that is measured is

underestimated. Finally, users of these paperwork estimates must be

careful in their interpretation; changes in the burden hour totals may not

8

When the President announced the results of agencies’ regulatory reinvention efforts in June 1995, he

said the 16,000 pages of rules being eliminated would stretch 5 miles if put end to end. He also said

that, as a result of those rules being eliminated, the federal regulatory burden would be “lighter,

specifically 39 pounds lighter.”

9

Melinda Warren, Regulation on the Rise: Analysis of the Federal Budget for 1992, Occasional Paper

No. 89. St Louis: Center for the Study of American Business, Washington University, July 1991.

10We reported that although by some estimates federal spending on regulatory programs had

increased, those same estimates when compared with increases in the gross domestic product have

remained relatively constant. See Regulatory Reform: Information on Costs, Cost-Effectiveness, and

Mandated Deadlines for Regulations (GAO/PEMD-95-18BR, Mar. 8, 1995).

11The Paperwork Reduction Act requires agencies to submit requests for information collections to

OMB for approval before they are carried out and when a previous OMB approval has expired.

Agencies usually develop an estimate of the average time each respondent would need to spend to

comply with that collection and the total number of respondents who must comply with the collection

requirement. Total burden is measured by multiplying the average response time per respondent by the

expected number of respondents times the number of responses required each year. OMB uses this

information to prepare an annual information collection budget that measures paperwork

requirements imposed on everyone outside of the federal government.

Page 17 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 1 

Introduction

reflect changes in the regulatory burden felt by businesses and

individuals.12

Another common measure of regulatory burden is the cost borne by

entities responsible for complying with the regulations involved. Studies of

the costs associated with federal regulations vary in such terms as their

scope (i.e., whether focused on individual businesses, sectors, or the

economy as a whole) and the factors they consider (i.e., economic costs,

social costs, paperwork costs, etc.). Types of regulatory cost studies are

discussed in detail in chapter 3 of this report. Regardless of the nature of

the study, though, the results must be carefully interpreted.13

Objectives, Scope,

and Methodology

At the request of five Members of Congress,14 we agreed to obtain

information about the cumulative impact of federal regulations on selected

businesses. Therefore, we focused our efforts on a limited number of

businesses that could help us understand the issues and variables

involved. Our specific objectives were to describe (1) what selected

businesses and federal agencies believed were the federal regulations that

applied to those businesses, (2) what those businesses believed was the

impact (cost and other) of those regulations, and (3) the regulations those

businesses said were most problematic to them and relevant federal

agencies’ responses to those concerns.

To accomplish these objectives, we first needed to identify the businesses

that would be the focus of our study. Because some of the information we

wanted to collect was proprietary in nature (e.g., information on the

companies’ operating expenses) or involved regulatory enforcement

actions that could be very sensitive, we recognized that some companies

12In our report entitled Paperwork Reduction: Reported Burden Hour Increases Reflect New

Estimates, Not Actual Changes (GAO/PEMD-94-3, Dec. 6, 1993), we noted that the burden hour

estimate increased by 261 percent between 1987 and 1992—from more than 1.8 billion hours to nearly

6.6 billion hours. However, most of this increase was due to a Department of the Treasury reestimate

of the time spent dealing primarily with tax-related reporting and filing burdens, not the imposition of

new burdens.

13In Regulatory Burden: Recent Studies, Industry Issues, and Agency Initiatives (GAO/GGD-94-28,

Dec. 13, 1993), we reviewed regulatory burden studies conducted by, or on behalf of, the federal

banking agencies and several of the major banking industry trade associations. We found the estimates

of regulatory compliance costs to be of little value due to serious methodological problems evident in

these studies.

14The Honorable Ted Stevens, Chairman, and the Honorable John Glenn, Ranking Minority Member,

Committee on Governmental Affairs, U.S. Senate; the Honorable Peter Hoekstra, Chairman,

Subcommittee on Oversight and Investigations, Committee on Economic and Educational

Opportunities, House of Representatives; the Honorable Don Nickles, U.S. Senate; and the Honorable

Amory Houghton, Jr., House of Representatives.

Page 18 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 1 

Introduction

might not want to participate in our study unless their identities could be

concealed. Therefore, we told the businesses we contacted that we would

not disclose their identity unless we had their permission to do so or

unless we were legally compelled or required to do so by Congress. We

asked for and received pledges from our requesters that they would

concur with and honor our pledge of confidentiality, and that they would

oppose disclosure requests from other committees or Members of

Congress. The requesters agreed that, although they would have access to

summary data that would not identify individuals or firms, neither they nor

their staff would have access to the individual business’ responses.

We initially attempted to obtain nominations of businesses to participate

in our study from two types of organizations: (1) business interest groups,

including several that had testified before Congress and/or made public

comments criticizing federal regulations, and (2) public interest groups,

some of which had defended the need for federal regulatory action. The

five business interest groups we contacted were the U.S. Chamber of

Commerce, the National Federation of Independent Businesses (NFIB), the

National Association of Manufacturers (NAM), the Chemical Manufacturers

Association (CMA), and the Greater Washington Board of Trade. The four

public interest groups we contacted were Public Citizen Litigation Group,

OMB Watch, Business for Social Responsibility (BSR), and Global

Environmental Management Initiative (GEMI). We initially contacted most

of these organizations during June through August 1994 and asked them to

nominate businesses that they believed would be good candidates for our

study.

Of these organizations, NAM and the Greater Washington Board of Trade

provided nominees for the study (three and six nominees, respectively).

Although the U.S. Chamber of Commerce initially indicated it would be

able to provide nominees for our study, several months later a

representative of the Chamber said that it would not provide any nominees

because of concerns its member companies had about our ability to

guarantee the confidentiality of their responses. During several months of

telephone calls, the NFIB representatives said that they were not able to

provide nominees because their efforts were then directed toward other

legislative initiatives and priorities. GEMI’s board of directors declined to

participate but did not provide a reason. BSR representatives initially

appeared interested in providing nominees for the review, but they did not

respond to any of our subsequent telephone calls. CMA, Public Citizen, and

OMB Watch initially agreed to try to identify companies for us to contact,

but we never received any nominees from either organization.

Page 19 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
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Introduction

Because we wanted to contact more companies than the interest groups

identified, we turned to other sources for potential study participants. One

such source was a list of companies that had participated in a March 1994

forum on regulatory reform sponsored by the Small Business

Administration (SBA). SBA staff who worked on the forum identified seven

companies that they believed would be good candidates for participation

in our review, and we accepted the nomination of another company from

one of the SBA nominees. Another source that we used to identify possible

company participants (35 companies) was newspaper and magazine

articles in which specific companies commented either positively or

negatively about federal regulations or their federal regulatory experience.

The periodicals we reviewed to identify these companies included INC.,

Nation’s Business, The Wall Street Journal, and the ABA Banking Journal.

We also used a literature search to improve the diversity of our company

selections, focusing on articles about companies in certain industrial

categories and geographic areas that were not represented by the other

nominees. The combination of all of these methods yielded a total of 51

companies as potential participants.

Many Companies Were

Reluctant to Participate in

the Study

Before contacting the 51 company nominees, we developed a standardized

telephone interview guide as part of an initial screening process to

(1) provide consistent descriptions of the purpose of our review,

(2) collect preliminary information about the companies’ views regarding

federal regulations, (3) explain the confidentiality guarantees we were

able to offer, and (4) determine the companies’ interest in participating in

our study and their ability to provide the information we needed.

Of the 51 company nominees we contacted, 8 did not respond to repeated

telephone calls made over the course of several months. Of the remaining

43 companies, 16 declined to participate in the study during the screening

process. Officials from 12 of these 16 companies said they did not have the

time or resources needed to participate in our study. Two companies’

officials said they did not have the kinds of documentation we were

seeking. The other two companies did not specify the reason for their

decision not to participate. Some companies decided not to participate in

the study after we had been in discussions with them for several months.

We then sent each of the 27 companies that agreed to participate in the

study a standardized interview guide we developed for use in our site

visits. The interview guide included an overall description of the study, a

list of the questions we intended to ask, and definitions of what

Page 20 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 1 

Introduction

regulations and regulatory costs would and would not be considered

applicable in the study. (See app. I for a reprint of this interview guide.)

We asked that the companies review the guide’s instructions and prepare

the requested information in advance of our visit.

Of the 27 companies that initially agreed to participate in the study, 10

withdrew before we could visit them and collect any detailed information.

These companies cited a variety of reasons for their withdrawal, such as a

lack of resources needed to participate in the study, the review’s data

requirements, and company personnel problems. Of the remaining 17

companies, we selected 15 for inclusion in the study. We did not select one

company because of its remote geographic location, and another company

was not chosen because we had already selected other companies in the

same industry.

Ten of the 15 companies requested that we not disclose their identity.

Whenever we discussed those companies with federal regulators and

whenever those companies are referred to in this report, we used 10

generic company descriptors. Those 10 descriptors are listed below:

• a federally chartered community bank (“Bank A”),

• a state-chartered community bank (“Bank B”),

• a large commercial bank (“Bank C”),

• a large teaching hospital (“hospital”),

• a manufacturer of railway tank cars (“tank car company”),

• a manufacturer of flexible plastic packaging (“packaging manufacturer”),

• a manufacturer of consumer glassware and fiber optic systems (“glass

company”),

• a manufacturer of paper and allied products (“paper company”),

• a tropical fish farm (“fish farm”), and

• a producer of crude oil and natural gas (“petrochemical company”).

The following five companies allowed us to use their names.

• Metro Machine Corporation, a ship repair and maintenance company

located in Norfolk, VA, with 850 employees;

• Minco Technologies Labs, Inc., a computer chip testing company located

in Austin, TX, with 129 employees;

• Multiplex Company, Inc., a beverage dispenser equipment manufacturer

headquartered in St. Louis, MO, with 217 employees;

• Roadway Services, Inc., a transportation and logistics company

headquartered in Akron, OH, with about 50,000 employees; and

Page 21 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 1 

Introduction

• Zaclon, Inc., a chemical manufacturing company located in Cleveland, OH,

with 52 employees.

Table 1.1 shows the distribution of all 15 participating companies by size

and industry category. We defined a company as small if it had 49 or fewer

employees, medium if it had from 50 to 249 employees, and large if it had

250 or more employees. The industry category groupings are the nine

major Standard Industrial Classifications defined by the Department of

Labor (DOL). As table 1.1 indicates, larger manufacturing companies

constitute the largest proportion of participating companies while

companies with few employees and companies in the services,

transportation, agriculture, and mining industries constitute the smallest

proportion of participating companies.

Table 1.1: Number of Companies

Participating in the GAO Review, by

Industry Category and Size

Size of company

(by number of employees)

Industry category

Small

(49 or fewer)

Medium

(50-249)

Large

(250 or more)

Total

(by category)

Services 0 0 1 1

Finance, insurance,

and real estate 1 1 1 3

Manufacturing 0 4 4 8

Retail trade 0 0 0 0

Transportation and

public utilities 0 0 1 1

Wholesale trade 0 0 0 0

Construction 0 0 0 0

Agriculture, forestry,

and fisheries 0 1 0 1

Mining 0 0 1 1

Total (by size) 1 6 8 15

The 15 companies that participated in the review were geographically

dispersed. They were located in California, the District of Columbia,

Florida, Illinois, Iowa, Missouri, New York, Ohio, Tennessee, Texas, and

Virginia.

Collection of Information

From the Companies

Using our standardized interview guide developed for the site visits, we

visited 14 of the 15 companies, interviewed company officials, and

Page 22 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 1 

Introduction

obtained any available supporting documentation.15 Specifically, we asked

each company for information on (1) the aggregate list of regulations with

which the company must comply, (2) the aggregate impact (cost and

other) of all of those regulations on the company, (3) the regulations the

company viewed as most problematic, (4) what the company believed

government and businesses could do to correct or mitigate those

problematic regulations, and (5) what the company viewed as the benefits

of federal regulations.

After our discussions with the companies, we developed written

summaries of the concerns they expressed about problematic regulations,

sent them to the companies for their review and correction, and obtained

their written agreement that the summaries accurately portrayed the

concerns they expressed. Subsequently, the companies also reviewed and

approved any other information in our report that we attributed to a

named company.

The companies provided more than 100 usable examples of regulations or

regulatory actions that they considered problematic.16 To present a general

summary of those concerns, we coded each concern according to 10

recurring themes that we developed by analyzing the companies’

comments. (See ch. 4 for a discussion of these 10 themes.) Most of the

companies’ concerns contained expressions of more than one theme. To

verify our coding, we had a staff reviewer, who was otherwise not

involved in the job, select a random sample of about 26 percent of the

concerns (29 of 111 concerns) and independently code each concern using

our original theme definitions. The independent reviewer agreed with our

original determinations as to whether a theme was present in more than

90 percent of the cases.

Agency Information

Collection Methodology

We provided the verified summaries of the companies’ regulatory

concerns to the appropriate federal regulatory agencies for their review

and comment. The following agencies responded to the companies’

concerns:

• Board of Governors of the Federal Reserve System;

15We did not visit one company because we were able to collect information by telephone and

facsimile.

16Some of the companies’ concerns were not usable because they were too general (e.g., “too many

regulations”). Other company concerns were eliminated because they were not concerns about federal

regulations.

Page 23 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 1 

Introduction

• Department of Health and Human Services’ (HHS) Food and Drug

Administration (FDA) and Health Care Financing Administration (HCFA);

• Department of Housing and Urban Development (HUD);

• Department of the Interior’s Fish and Wildlife Service;

• Department of Justice (DOJ);

• Department of Labor’s Occupational Safety and Health Administration,

Employment Standards Administration’s (ESA), and Pension and Welfare

Benefits Administration (PWBA);

• Department of Transportation (DOT);

• Department of the Treasury’s Financial Crimes Enforcement Network

(FinCEN) and Internal Revenue Service (IRS);

• Environmental Protection Agency;

• Equal Employment Opportunity Commission (EEOC);

• Federal Deposit Insurance Corporation (FDIC);

• Federal Emergency Management Agency;

• Office of the Comptroller of the Currency (OCC);

• Pension Benefit Guaranty Corporation (PBGC); and

• United States Sentencing Commission (USSC).

Each agency was allowed to decide how it would respond to the

companies’ regulatory concerns. We used a content analysis, which was

similar to the one we used for the companies’ concerns, to code each of

the agencies’ responses to one of nine recurring themes to allow

summarization of those responses. The agency response coding was also

independently reviewed by a staff reviewer to ensure accuracy and

consistency.

We also asked the agencies to identify which of their regulations were

applicable to each of the selected companies. However, several of the

regulatory agencies said developing a regulatory inventory for each

company would be very time consuming and would require detailed

information about the companies. Because 10 of the 15 companies

requested anonymity, and because detailed information (location,

industry, and size) could lead to identification of those companies, we

could not provide the agencies with the information they said they needed

to identify the companies’ responsibilities. Therefore, we asked several of

the regulatory agencies to identify (1) the general types of company

information they would need to determine which of their regulations

would apply to a specific company (i.e., regulatory determinants) and

(2) the types of assistance they provide to businesses to help them identify

their regulatory responsibilities and how to comply with those

responsibilities (i.e., informational mechanisms). We also asked three of

Page 24 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 1 

Introduction

the agencies—EPA, DOL, and EEOC—to identify their regulatory

responsibilities for two of the companies that did not request

anonymity—Minco Technologies Lab, Inc., and Zaclon, Inc.

Review Limitations The methodology we used in this study—focusing on a small group of

nonrandomly selected businesses—prevents us from drawing statistical

generalizations from the information we obtained. The 15 companies we

selected were generally those that (1) were identified by interest groups,

SBA officials, or in the literature and (2) were willing to participate in our

study and to provide the information we requested. Therefore, we make no

inferences about the representativeness of their responses to how other

companies would respond. For example, even though 8 of our 15

companies were manufacturers, we cannot conclude that their responses

are typical of how other manufacturing companies would have responded.

However, the comments the companies we contacted made during this

study were similar in many respects to comments made by companies in

some of our previous reports and in the literature.17 Therefore, we believe

that these 15 companies are not atypical and their comments and

experiences provide insights regarding issues common to organizations

beyond the limited sample of companies.

Because the purpose of our review was to determine businesses’ and

federal agencies’ views regarding regulatory issues, we did not collect

information from individuals and organizations outside of those groups.

For example, we did not discuss companies’ regulatory responsibilities or

their regulatory concerns with labor unions or other employee

organizations. Neither did we collect information from individuals and

organizations that were the potential beneficiaries of the regulations cited

by the companies as problematic. Collecting the views of all such

organizations for all of the regulations cited in this report would have been

difficult, if not impossible. Therefore, this report does not reflect the full

range of opinions that may exist regarding the issues raised during this

review. However, it does reflect the views of the two stakeholders in

which we were most interested—certain elements of the regulated

community and the regulators themselves.

One of our objectives was to describe what the selected businesses

believed was the impact (cost and other) of all existing federal regulations

that applied to them. This portion of the study does not address the

17Workplace Regulation: Information on Selected Employer and Union Experiences

(GAO/HEHS-94-138, June 30, 1994).

Page 25 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 1 

Introduction

development of cost or cost-benefit analysis information for individual

regulations, such as the analyses agencies are required to perform under

Executive Order 12866.

Although we attempted to obtain documentation wherever possible, we

were unable to verify most of the data companies provided on the cost of

regulatory compliance, their regulatory concerns, and other issues.

Companies frequently provided little documentation to support their cost

estimates, and we had no basis to judge whether the costs they identified

were reasonable, comparable to costs incurred by similar companies, or

even whether such costs were, in fact, the direct result of a specific federal

regulatory requirement. Neither did we evaluate the accuracy of the

information we obtained from federal regulatory agencies. Our approach

was to present the views of both the businesses and the agencies without

attempting to resolve the many differences in opinions or attempting to

independently determine whether sufficient evidence was available to

support either view.

In this report, when we indicate that “some” of the companies met a

certain condition, we mean that at least three and no more than five

companies met that condition. When we use the term “many companies”

we mean either 6 or 7 companies, and the term “most companies” refers to

between 8 and 14 companies.

We conducted our review from June 1994 to July 1996 in accordance with

generally accepted government auditing standards. We invited comments

on a draft of this report from the OIRA Administrator because of OIRA’s

governmentwide regulatory responsibilities, but an OIRA official said OIRA

had no comments. We also invited comments from the top officials or their

designees in the previously listed 19 federal departments and agencies

responsible for the companies’ federal regulatory concerns. Between

August 19, 1996, and September 19, 1996, we received comments from top

officials or their designees in 13 of these 19 departments and agencies, but

officials from the Board of Governors of the Federal Reserve System, FDA,

HUD, the Department of the Interior’s Fish and Wildlife Service, the Federal

Emergency Management Agency, and USSC said they had no comments. In

general, the agencies’ comments indicated that the report was an accurate

characterization of their regulatory operations and their positions

regarding the companies’ concerns. Most of the agencies suggested

technical corrections or additions of text, which were incorporated as

appropriate.

Page 26 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 2 

Companies and Agencies Had Difficulty

Developing Lists of Applicable Regulations

As noted in chapter 1, representatives from both government and industry

have described federal regulatory burden in terms of the sheer volume of

regulations with which businesses and other regulated entities must

comply. Several of the companies participating in this review also made

such comments to us in the course of our discussions with them. For

example, an official from the fish farm compared the range of regulatory

requirements to “getting pecked to death by ducks—each bite may not

hurt, but all together they are very painful.”

In recognition of the large number of federal regulations and the burden

they impose, an element of both the Clinton administration’s and

Congress’ recent regulatory reform initiatives has been the review of

existing regulations and, where possible, the elimination of certain

requirements. Although the total number of regulations is only a rough

indication of regulatory burden, developing an inventory of those

requirements is the first step in developing an accurate measure of an

organization’s regulatory burden. Therefore, we asked the companies

participating in this review to develop a list of all of the federal regulations

with which they had to comply at the time of our review. We also asked a

number of federal regulatory agencies to identify which of their

regulations they believed were applicable to those businesses.

None of the

Companies Provided a

Complete List of

Regulations

We generally provided the companies with a copy of our data collection

instrument several weeks in advance of our visit, and each company

agreed to develop a list of regulations applicable to their firm.1

 We

recognized that, in preparing such a list, the companies might find it

difficult to identify the specific names or legal citations of regulations.

Therefore, we told the businesses that their list of applicable regulations

should, at a minimum, cite the major federal statutes governing the

regulations. For example, we said the list of statutes in the health and

safety area of workplace regulations might include the Occupational

Safety and Health Act or the Drug Free Workplace Act. We also said that

other categories of workplace regulations could include labor standards

(e.g., the Fair Labor Standards Act); employee benefits (e.g., Employee

Retirement Income Security Act (ERISA)); civil rights (e.g., title VII of the

Civil Rights Act of 1964); and labor relations (e.g., the National Labor

Relations Act). Finally, we noted that other categories of regulations (e.g.,

environmental and tax regulations) could also be listed.

1

See appendix I for a reprint of the data collection instrument.

Page 27 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
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Companies and Agencies Had Difficulty

Developing Lists of Applicable Regulations

We told the companies not to include certain types of regulations on their

lists, such as federal regulations that had been proposed but had not been

published as a final rule. We also said that they should not include state or

local regulations, but we said that any state or local requirement that they

believed was mandated by federal law or regulation should be included.

Although all 15 of the companies participating in the review identified at

least some regulations that they believed were applicable to their

organizations, none of the companies provided us with a complete list of

applicable federal regulations. The companies’ lists varied substantially in

the degree to which they covered the general regulatory areas that would

probably be applicable to the companies (e.g., tax, wage and hour, and

workplace rules). Several companies listed regulations in only certain

functional areas or for certain agencies. For example, officials from the

paper company identified what they believed were applicable

environmental, health and safety, and transportation regulations—areas

that they said were their company’s greatest concern. However, they did

not identify any regulations in the employee benefits, civil rights, labor

relations, or tax areas. Some companies provided what they described as a

partial list of regulations and indicated they would provide additional

information, but never did so. Two companies’ lists reflected only the

problematic regulations we asked them to identify for another portion of

this review. (See ch. 4 of this report.) Although officials from several

companies said they believed their lists contained 75 to 90 percent of the

regulations applicable to them, most of the companies’ officials

acknowledged that their lists were incomplete.

The companies’ lists also varied in the level of detail they provided. Some

companies identified only broad regulatory areas or general regulatory

requirements (e.g., “workmen’s compensation” or “IRS”) but other

companies’ lists were more specific. For example, one section of

Roadway’s list focused on civil rights and employee benefits. Within that

section, the company officials cited title VII of the Civil Rights Act of 1964

and listed its associated regulations—29 C.F.R. Parts 1601 and 1602

(Subparts A-E) and 29 C.F.R. Parts 1604-1606, 1608, and 1610-1612.

Most of the companies did not maintain lists of applicable regulations, so

they had to compile the information they provided in response to our

request. Although officials from each company told us they would prepare

a list of applicable regulations, several companies had not done so at the

time of our site visit. Other companies made a more extensive effort to

respond to our requests for information. For example, a number of officers

Page 28 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
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Companies and Agencies Had Difficulty

Developing Lists of Applicable Regulations

and staff within Roadway conducted research and developed

documentation. The hospital provided several lists of applicable

regulations, one that the administrative staff had developed covering a

variety of issues and another from hospital health protection staff.

A few companies compiled the information we requested on the basis of

lists of regulations that had been previously developed for certain areas of

their operations. However, even these lists were not comprehensive. For

example, the petrochemical company had developed a list of

environmental, workplace safety, and other regulations for use by their

internal auditing staff. However, company officials told us that the list was

not necessarily complete. The paper company used an EPA publication

entitled Federal Environmental Regulations Potentially Affecting the

Commercial Printing Industry. However, company officials noted that this

document contained a disclaimer that said it should “not be relied on by

companies in the printing industry to determine applicable regulatory

requirements.”

Companies Cited Various

Reasons for Incomplete

Lists of Regulations

Some of the companies said it was difficult for them to produce a

complete list of applicable regulations because they had limited resources

and higher priorities. For example, Multiplex officials said that to compile

a complete list of regulations would “use so much time and so many

resources that it would be a burden on the company and adversely affect

its business operations.” Bank C’s official said the bank could not devote

the time and staff resources needed to produce a complete list of

regulations due to higher priority bank-related work. We recognized that

producing an aggregate list of regulations would be an expensive and

time-intensive endeavor because of the complex analysis required to

identify every regulation affecting the business.

Some of the companies also said that some federal regulatory

requirements were hard to identify because they had become part of the

companies’ standard procedures. For example, Roadway’s officials said

that developing a comprehensive list of regulations was difficult because

many regulations have been around for so long they are now part of

everyday operations of the company. Officials from the fish farm said that

some regulatory requirements (e.g., payroll recordkeeping standards) are

now considered part of their everyday business operations. The officials

also said that some outside organizations (e.g., insurance companies)

require the company to follow certain safety procedures, and they were

not sure whether those procedures were also required by regulations.

Page 29 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
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Companies and Agencies Had Difficulty

Developing Lists of Applicable Regulations

Officials from the petrochemical company said regulations often cause a

fundamental shift in business processes that later becomes less distinctive.

The officials noted that industry incurred start-up costs associated with

the requirement to produce unleaded gasoline, but because the entire

industry was required to be in compliance the identification and capture of

these costs became less relevant over time.

Some of the companies also said it was difficult to distinguish between

federal requirements and those of other governmental jurisdictions.

Officials from the paper company said making this distinction was

“difficult, if not impossible.” The petrochemical company indicated that it

was particularly difficult to separate the requirements when state or local

governments enforce federal standards and can add additional

requirements. One California company noted that all OSHA regulations and

many EPA regulations are enforced by the state, and that California often

adds stricter state requirements.

The companies also cited other reasons why their lists of applicable

regulations were incomplete or difficult to compile. For example, a fish

farm official said that the regulators themselves are sometimes unable to

inform the company of all applicable regulations. Petrochemical company

officials were reluctant to characterize their list as complete because of a

concern that if a regulator saw certain requirements missing from their list

they might assume the company was not complying with the missing

regulations and pursue some type of enforcement action against the

company. Other companies simply noted that their lists were incomplete,

but did not provide a reason for this characterization.

Agencies Had

Difficulty Providing

Lists of Applicable

Regulations

We also planned to ask each of the agencies whose regulations were cited

by the companies to provide a list of regulations applicable to each of the

companies. However, officials from several of the agencies we initially

contacted said they could not provide such lists without first obtaining a

great deal of specific information about the company. For example, a DOT

official said that the agency would need such information as whether the

company uses rail transportation, the types of material the company

transports, and the nature of the business enterprise (e.g., whether it was a

partnership or a corporation). IRS officials said they would need to know

whether the business was privately or publicly held, whether it imported

or exported materials or products, and whether it had foreign as well as

domestic operations. The IRS officials said operational and administrative

Page 30 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Chapter 2 

Companies and Agencies Had Difficulty

Developing Lists of Applicable Regulations

decisions made throughout the existence of the companies affect their tax

status and, therefore, the applicable tax regulations.

EPA officials also said that the collection of the information they needed to

identify applicable regulations would require a large expenditure of

resources at a time when their budget was uncertain. The officials said

they would have to conduct a site visit at each company to identify their

applicable regulations.

Another reason we did not ask the agencies to provide lists of regulations

for each of the participating companies was that 10 of the 15 participating

companies wanted to remain anonymous. Therefore, the agencies could

not contact them directly to collect information, and we could not provide

the agencies with detailed information about the companies (e.g., industry,

size, location, etc.) that could disclose their identities.

Because we were unable to receive lists of applicable regulations from the

agencies, we changed the nature of our inquiry to focus on three related

issues. First, we asked 17 of the regulatory agencies that the companies

had cited in their lists of regulations to describe the kinds of information

they needed to be able to determine the applicability of their regulations to

a particular company. Second, we asked each of these agencies to

describe the kinds of assistance they provide to companies to help them

determine which regulations were applicable to them and how to comply

with the regulations. Finally, we asked six agencies and offices to identify

which of their regulations were applicable to two of the participating

companies that had not asked for anonymity.

Agencies’ Determinants of

Regulatory Coverage

Varied

Fifteen agencies provided information on their regulatory determinants.

Officials from many of the 15 agencies said that unique characteristics of a

business or a business activity determine whether their regulations are

applicable to that business. See the following examples of agencies’

regulatory determinants.

• DOT officials said that the applicability of its regulations generally varied by

industry, transportation mode, location, and other factors, including the

type of material being shipped and the nature and ownership of the

transportation firm.

• OCC officials said that a bank’s specific activities determined the

applicability of its regulations. Similarly, the Federal Reserve Board’s (FRB)

officials said that coverage of its regulations “is determined by either the

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nature of a particular company or the nature of the activities in which a

particular company engages or intends to engage.”

• EPA officials said that “there is no single set of regulatory determinants that

would cover all situations in which a facility may be covered by EPA’s

regulations. Many of our regulations are event driven, some factors are

related to facility location, and many regulations are triggered by physical

and operational characteristics of a particular facility.”

• IRS officials said it was difficult to come up with criteria for the

development of a list of regulations applicable to a particular company

because of decisions that companies make in the course of their business.

For example, IRS officials said that if a company chooses to provide a

qualified retirement plan, it must comply with the statutory provisions and

regulations applicable to such plans.

• OSHA’s officials said that it “regulates occupational safety and health

hazards, not specific industries.” Therefore, the “applicability of individual

standards depends on whether or not the hazard addressed by the

standard is present in the workplace.”2

Officials from DOL indicated that companies’ specific reporting

requirements also varied according to specific criteria. For example, the

officials said that the requirements for the Form 5500 used by employee

benefit plan administrators to satisfy their reporting obligations under title

I of ERISA, title IV of ERISA, and the Internal Revenue Code depend on

(1) the type of plan (i.e., whether the plan is a pension or welfare plan);

(2) the size of the plan (i.e., whether the plan has fewer than 100

participants or 100 or more participants); and (3) how the benefits are

funded (i.e., through a trust or insurance or from the general assets of the

employer).3

On the other hand, some agencies’ officials said that determining the

applicability of their regulations is relatively straightforward. See the

following examples:

• EEOC officials said that, with the exception of reporting requirements, EEOC

regulations apply to all entities covered by the statutes it enforces, and the

officials indicated that the applicability of those statutes is primarily a

2

However, OSHA went on to say that “(d)etermining which standards apply to a particular worksite

can be done easily (by a regulated business) through a process of elimination. For example, if an

employer is engaged in retail trade or service and does not have compressed gases, flammables, or

explosives on his or her premises, the employer can eliminate Hazardous Materials (29 C.F.R. 1910,

Subpart H) as not applying to his or her business.”

3

Medical, surgical, hospital care, vacation, and scholarship benefits are among those that may be

offered by a welfare plan.

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function of company size. For example, EEOC officials said that title VII of

the Civil Rights Act of 1964 and the Americans with Disabilities Act (ADA)

apply to any company with 15 or more employees. The officials also said

that the Age Discrimination in Employment Act (ADEA) applies to all

employers with 20 or more employees. According to the officials, any

private employer with 100 or more employees must complete their EEO-1

reporting form indicating the race, ethnicity, and sex of employees by job

category.4

• Officials from the Office of Federal Contract Compliance Programs

(OFCCP) in DOL said Executive Order 11246, which OFCCP administers,

applies only to contractors and subcontractors who perform government

contracts that total at least $10,000 in a 12-month period. However, the

officials said that nonconstruction contractors with 50 or more employees

and contracts greater than $50,000 have additional obligations.

• The PBGC officials said PBGC’s insurance program and regulations apply

only with respect to defined benefit pension plans as described in section

4021 of ERISA. The agency officials said that section 4021 generally covers

all defined benefit pension plans voluntarily established by private sector

employers, and specifically states what plans are excluded from coverage.

• The FDIC officials said that coverage by FDIC regulations “is determined

basically by whether an institution is FDIC-insured, and as a subset of that

status, whether the institution is an insured nonmember bank for which

the FDIC has primary supervisory responsibility at the federal level.”

Agency Informational

Mechanisms Varied

Sixteen agencies described how they provide information to companies

and the public on their regulatory requirements. Most of the agencies

identified telephone numbers and listed various publications, handouts,

brochures, informational pamphlets, and notifications containing

regulatory information. Half of these agencies had or were developing

(1) special programs to communicate regulatory requirements to affected

businesses and (2) outreach efforts to gather feedback on their regulatory

requirements. Six agencies indicated that they used some type of

electronic bulletin board as an informational mechanism.

OSHA described a variety of informational resources and programs,

including the following examples:

• more than 80 different publications available from OSHA’s Publications

Office, some of which were also available in OSHA’s 100 field offices;

4

EEOC officials noted that federal contractors and subcontractors are covered by other regulatory

requirements.

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• safety and health standards in CD-ROM format (available for purchase

from the Government Printing Office) containing all OSHA standards,

compliance directives, and standards interpretations;

• a DOL-operated Labor News Electronic Bulletin Board and an OSHA

Computer Information System accessible through the Internet, which

contains some of the information on the CD-ROM;

• the OSHA Consultation Program, which offers free, on-site, expert

assistance to small employers in all 50 states to help them comply with

OSHA requirements and establish effective safety and health programs

(according to OSHA, more than 100,000 employers have used this service

and priority is given to small firms in high-hazard businesses); and

• courses on specific safety and health issues for employers who want

intensive information about specific safety and health issues at OSHA’s

Training Institute in Des Plaines, IL, and at OSHA Education Centers in 12

states.

OSHA’s officials said OSHA is also piloting several other ways to use

computer technology to provide assistance to employers, including the

development of interactive compliance tools.

EPA also cited dozens of sources of information about its regulations,

including brochures, pamphlets, fact sheets, booklets, letters, hotlines,

regional contact numbers, guidance manuals, posters, question and

answer sheets, and catalogues of informational materials. EPA listed

informational sources for each of its program offices and, within those

offices, the sources were also often differentiated by issue. For example,

the Office of Prevention, Pesticides and Toxic Substances said it had many

of the informational modes listed above as well as information lines for

pesticide questions, “PR Notices” providing detailed information to

regulated industries, registration kits for those interested in how to

register new pesticide products, and outreach efforts to help growers that

rely on minor use pesticides. Among the initiatives EPA particularly noted

were the following:

• Compliance assistance centers were being established by EPA’s Office of

Compliance for four industry sectors—automotive, metal finishing,

printing, and agriculture. EPA officials said the centers offer “one-stop

shopping” for understandable guidance materials, waste minimization and

pollution prevention assistance, and advice in reducing regulatory

compliance costs.

• Sector Notebooks, which are profiles of 18 industries (e.g., metal

fabrication, petroleum refining, and printing), were designed to assist

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firms in understanding what multimedia regulations apply to them. Each

profile includes, among other things, applicable federal statutes and

regulations as well as compliance assistance information. Notebooks are

available through the Government Printing Office and on an electronic

bulletin board.

• The Office of the Small Business Ombudsman was established to provide a

variety of information mechanisms to help communication between the

small business community and EPA. EPA officials said the Office has a

hotline service that receives nearly 20,000 calls per year, serves as the

“one-stop shop” for EPA technical assistance and information, maintains an

informal dialogue with over 45 trade associations, and advocates small

business positions inside EPA.

EPA also described the mechanisms one of its regional offices (Kansas

City) used to communicate regulatory information to the public, including

an Agricultural Compliance Assistance Center, public meetings and

workshops, “availability sessions” in which regional staff privately meet

with citizens one-on-one to discuss issues, state- and trade

association-sponsored meetings, mass mailings, public speaking, a toll-free

Action Line, and an Iowa RCRA Hazardous Waste Helpline.

Other agencies cited many of the same kinds of mechanisms. According to

its officials, EEOC (1) conducted training and outreach seminars during

fiscal year 1993 that reached an estimated 4,000 private sector employers

and more than 94,000 individuals; (2) published and distributed millions of

copies of training materials; (3) mailed out 477,933 publications during the

first three quarters of fiscal year 1995; and (4) responded to thousands of

public inquiries per year. DOT’s officials said DOT public information efforts

include electronic bulletin boards, toll-free hotlines, free guidance

materials, news releases, mailing lists, and briefings to industry

associations. The DOJ officials cited their toll-free ADA Information Line;

technical assistance materials; a computer bulletin board and Internet

connections; a speakers’ bureau, which provides technical assistance at

about 120 events each year; more than 40 technical assistance grants to

trade associations; an ADA Information File containing more than 30

technical assistance publications placed in 15,000 public libraries

throughout the country; and informational notices about the ADA, which

are distributed to 6 million businesses through IRS’ quarterly mailing to

employers.

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Regulatory Information

Relies on Businesses’

Initiative, Appears

Fragmented

Some of the agencies’ regulatory informational mechanisms are proactive,

providing information to businesses and others at the agencies’ initiative.

However, many agencies, if not most, require businesses to take the

initiative in obtaining compliance information. For example, OSHA officials

said that although the agency offered a variety of informational

mechanisms, it was up to each business to understand its own regulatory

compliance responsibilities.5

 However, the businesses that we talked to

sometimes indicated a reluctance to approach regulatory agencies for

information. For example, an official from Minco said that it was difficult

to stay aware of the changes in regulatory requirements because they

could not ask “enforcers” to provide information without potentially

calling Minco’s actions into question. Other indications of the businesses’

reluctance to address regulators directly were the decisions by 10 of the 15

companies to remain anonymous during this review.

Also, it is not always readily apparent to businesses which agency of the

federal bureaucracy is responsible for a particular program. For example,

DOJ officials explained that the ADA defines separate responsibilities for

EEOC and DOJ. EEOC provides information about ADA employment

regulations, but information about titles II and III of the act (architectural

barriers) is available only from DOJ6

. Sometimes multiple information

sources exist within a particular agency, with businesses frequently

required to make more than one contact to gather information about that

agency’s regulatory requirements. As previously noted, EPA listed

informational mechanisms by program office—Air and Radiation;

Prevention, Pesticides, and Toxic Substances; Solid Waste and Emergency

Response; and Water—as well as within a regional office. Therefore, a

business would need to be aware of EPA’s structure and programmatic

configuration to obtain information about all EPA programs. However, EPA

has taken some steps to consolidate this information by providing single

points of contact for small businesses in its Small Business Ombudsman

office and compliance assistance centers for certain industries.

Several Agencies Recently

Developed Innovative

Informational Mechanisms

Some agencies are attempting to develop methods by which businesses

can obtain information about regulatory requirements and other topics in

a more efficient and understandable way. For example, in June 1995, the

5

OSHA officials also said that one of their informational mechanisms was a nationwide small business

compliance consultation program.

6

DOJ officials later noted that although the statute defines separate roles for EEOC and DOJ, it also

provides for technical assistance coordination and, as a result of their efforts, the public is being

referred to the appropriate agency.

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President asked SBA to cochair an effort to make government information

more accessible to government customers. SBA developed the idea of a

World Wide Web site on the Internet that would, among other things, allow

companies to know what federal regulations apply to their operations.

Working with the Lawrence Livermore National Laboratory, the University

of Massachusetts, and more than two dozen federal departments and

agencies, SBA developed the “U.S. Business Advisor” home page, a version

of which was formally unveiled in February 1996.7

 Using the Advisor,

businesses can access a regulatory assistance center to search an

electronic database of current and proposed regulations within particular

subject areas. For example, a business can type in the term “chlorine

production” and get a listing of chlorine-related regulations and proposed

regulations. Businesses can also use the Advisor to obtain the full text of

the current or proposed rule. SBA officials said the Advisor is still being

developed, and they hope that future iterations will be even more

user-friendly.

Some agencies are developing their own World Wide Web sites on the

Internet with regard to particular issues. For example, in October 1995,

OSHA worked with the business community to create an on-line “asbestos

advisor” program that helps businesses determine whether their company

is complying with regulations on asbestos exposure.8

 The program solicits

information about users’ workplaces and tasks, and automatically

provides guidance to ensure compliance. As of July 1996, more than 6,100

people had downloaded copies of the program. OSHA said that because of

further distribution of the asbestos advisor by major corporations and

trade associations, actual circulation could be 10 times greater than the

number of downloaded copies. OSHA has developed on-line advisors for

other standards (e.g., permit-required confined spaces and cadmium) and

plans to create other interactive expert advisors on other issues (e.g., lead

in construction and control of hazardous energy sources). DOL officials

said the Department has also developed an Internet web site that includes

copies of its statutes and regulations and a small business handbook that

provides information about all DOL workplace requirements in

nontechnical language.

7

The Internet address for the U.S. Business Advisor is http://www.business.gov.

8

The Internet address for the asbestos advisor is http://www.osha.gov.

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Regulations Applicable to

Two Companies Often

Differed

We asked EPA, EEOC, and four agencies and offices within DOL—OSHA, PWBA,

and the Wage and Hour Division and OFCCP within ESA—to identify which

of their regulations were applicable to two of the companies participating

in this review—Minco and Zaclon. Neither of these two companies

requested anonymity, and they agreed to provide any information needed

by the agencies in determining their applicable regulations. Minco is

located in Austin, TX; has 129 employees; and is a federal subcontractor

that tests computer chips for federal contractors involved in military,

space, and medical industries. Zaclon is located in Cleveland, OH; has 52

employees; and manufactures organic and inorganic chemical compounds.

Officials from some of the agencies we contacted initially expressed

concerns about providing a list of regulations applicable to the companies.

For example, EPA officials said that if the list was incomplete in any way

(e.g., because new regulations were issued after they provided a list or

because EPA did not know about an element of a company’s operations

that was covered by its regulations), the absence of a regulation from its

list could be construed to mean that the company did not legally have to

comply with that requirement. An official at OSHA questioned whether

developing a list of applicable regulations was a useful method to measure

the impact of OSHA’s regulatory requirements. The official said that a list of

all OSHA regulations a company must comply with could appear extensive,

but would not provide any information on the beneficial results produced

by these requirements. The official also said that this exercise might create

an unfair impression of OSHA outreach efforts or a company’s knowledge of

its regulatory responsibilities.

Despite these concerns, EPA, EEOC, and each of the four DOL agencies

provided a list of regulations they said were applicable to the companies.

Several of the agencies indicated that the two companies’ regulatory

responsibilities varied substantially. One indicated that the companies’

regulatory responsibilities were the same in some respects and different in

others. One agency said the two companies’ responsibilities were the same

in all respects.

EPA Regulations EPA limited its description of applicable regulations to four major

environmental statutes—RCRA, CAA, CWA, and TSCA. The agency also

emphasized that its observations were not meant to indicate there had

been a formal compliance review or audit of the companies and, therefore,

its observations were not an explicit or implied assessment of the

companies’ compliance status. With regard to Minco, EPA officials said that

the company is not regulated at the federal level with regard to any of the

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above-mentioned statutes because it has no air permits, does not

formulate new or existing chemicals, does not manufacture or handle

herbicides or pesticides, and does not have any underground storage

tanks.

However, the officials said that EPA’s limited review of Zaclon’s operations

indicated that it faced a number of federal regulatory requirements.

• Because the company produces chemicals, EPA officials said Zaclon is

responsible for reporting under TSCA’s sections 5 and 8 and is subject to

annual Emergency Planning and Community Right-to-Know Act (EPCRA)

Section 313 emissions reporting.

• EPA officials said Zaclon’s discharges to the local waterways make the

company responsible under CWA and its permits for (1) monthly discharge

monitoring reports; (2) the Spill Prevention, Control, and

Countermeasures’ (SPCC) revision deadline; and (3) the National Emissions

Standards for Hazardous Air Pollutants’ (NESHAP) benzene waste water

report.

• EPA officials said Zaclon’s stack emissions make the company responsible

under CAA, including NESHAP fugitive and point source emission reporting

for benzene, and air compliance reports.

• As a hazardous waste generator EPA officials said Zaclon is subject to RCRA,

including quantifying amounts of annual hazardous wastes, annual

financial assurance reporting, and waste minimization reports.

EPA officials also said that Zaclon is required under many of the statutes to

report any spills or releases when they occur. The officials said that

certain chemicals could be considered a pesticide under the Federal

Insecticide, Fungicide, and Rodenticide Act; a drug or cosmetic under the

Federal Food and Drug Act; a chemical under TSCA; or a waste under RCRA.

However, because EPA assumed that the company knew whether any

chemicals it produces or uses fall under one of these statutes, it did not

describe applicable regulations in those situations.

EEOC Regulations EEOC divided its response into reporting and recordkeeping issues. The

agency’s officials said that the only reporting requirement EEOC imposed

on Minco was that it annually submit a complete Form 100 (also known as

an EEO-1 report) because the company had at least 100 employees.

However, the agency officials said that Zaclon does not have to submit the

form because it has less than 100 employees.

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EEOC officials said both Minco and Zaclon are covered by the agency’s

recordkeeping requirements, but the length of time for which the records

must be maintained varied by statute. The officials said 29 C.F.R. 1602.14

requires both companies to preserve all personnel and employment

records for 1 year after the preparation of the record or the date of a

related personnel action, whichever is later. Also, records must be

retained for any employee involuntarily terminated. EEOC officials said 29

C.F.R. 1620.32 requires both companies to preserve records relevant to the

payment of wages under the Equal Pay Act for 2 years. The officials said

29 C.F.R. 1627.3 requires each company covered by the ADEA to make and

keep records for each employee (name, address, date of birth, occupation,

rate of pay, and compensation earned each week) for 3 years. Employers

also must keep a copy of their employee benefit plans on file. If an

enforcement action is initiated under title VII, the ADA, or the ADEA, EEOC

requires the employer to retain any related records until a final

disposition.

Finally, EEOC noted that Minco and Zaclon are covered by the

recordkeeping requirements in the Uniform Guidelines on Employee

Selection Procedures (29 C.F.R. 1607), but that each company has

different obligations under these requirements. Since Minco has more than

100 employees, it is required to maintain records that would disclose

whether its selection procedures have an adverse impact on the basis of

race, gender, or ethnic group. The Guidelines also require Minco to

annually evaluate whether its selection process is having an adverse

impact. If so, it must maintain and have available evidence supporting the

validity of its selection process. However, because Zaclon has less than

100 employees, it can use simplified recordkeeping procedures that use

the existing statistical information present in the company’s personnel

files.

DOL-OSHA Regulations OSHA officials indicated that the regulatory responsibilities of Minco and

Zaclon are identical. The officials cited 29 C.F.R. 1903 (Inspections,

Citations and Proposed Penalties); 1904 (Recording and Reporting

Occupational Injuries and Illnesses); 1910.20 (Access to Employee

Exposure Records); and various other subparts of section 1910 as

applicable to both companies. They also said OSHA’s General Industry

Standards would generally apply to each company, depending on the

hazards in the workplace.

DOL-Wage and Hour Division

Regulations

DOL’s Wage and Hour Division stated that most of the regulations it cited

applied to both Minco and Zaclon. For example, it said the following:

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• The Fair Labor Standards Act (29 U.S.C 201 et seq.) and its applicable

regulations (29 C.F.R. Parts 510-794) apply to both companies because

they are covered “enterprises” with sales in excess of $500,000 per year.

• The Employee Polygraph Protection Act (29 U.S.C. 2001-2009) and its

applicable regulations (29 C.F.R. Part 801) apply to both companies

because they are “. . . engaged in or affecting commerce or in the

production of goods for commerce . . . .”

• FMLA (29 U.S.C. 2601 et seq.) and its applicable regulations (29 C.F.R. Part

825) apply to both companies because they are both “. . . engaged in

commerce or in any industry or activity affecting commerce . . .” and

employ at least 50 employees during 20 or more work weeks during the

year.

However, the Wage and Hour Division’s officials said that the

McNamara-O’Hara Service Contract Act (41 U.S.C. 351 et seq.) and its

regulations (29 C.F.R. Part 4) applied only to Minco because Zaclon does

not contract to provide services to the federal government or the District

of Columbia.

DOL-OFCCP Regulations OFCCP’s officials said that OFCCP administers and enforces three equal

employment opportunity programs that pertain to government contractors

and subcontractors and to federally assisted construction contractors and

subcontractors. The programs OFCCP officials noted are listed below:

• Executive Order 11246, as amended (41 C.F.R. Parts 60-1 through 60-60),

which prohibits discrimination in employment on the basis of race, color,

religion, sex, or national origin and requires affirmative action;

• section 503 of the Rehabilitation Act of 1973, as amended (29 U.S.C. 793),

and its implementing regulations (41 C.F.R. Part 60-741), which require

affirmative action and prohibit discrimination in employment against

qualified individuals with disabilities; and

• provisions of the Vietnam Era Veterans’ Readjustment Assistance Act of

1974, as amended (38 U.S.C. 4212), and its implementing regulations (41

C.F.R. Part 60-250), which require affirmative action and

nondiscrimination with respect to special disabled and Vietnam-era

veterans.

The programs apply to contractors and subcontractors who perform

government contracts or federally assisted construction contracts that

total at least $10,000 in a 12-month period. Because Zaclon was not a

federal contractor or subcontractor at the time of our review, OFCCP

officials said the programs’ requirements did not apply to the company.

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However, Minco was a federal subcontractor with contracts in excess of

$10,000, so OFCCP officials said that all three programs applied to the

company. Also, because Minco had more than 50 employees and

performed government contracts worth at least $50,000, OFCCP’s officials

said it was obligated to develop a written affirmative action program under

each of these laws. OFCCP officials said these plans could be separate

documents containing the different analysis that each law requires or a

single document consolidating each of the laws’ required analyses into one

affirmative action plan.

DOL-PWBA Regulations PWBA summarized the companies’ basic reporting and disclosure

requirements under Part 1 of ERISA. PWBA’s officials stated that PWBA did not

attempt to summarize all conceivable reporting and disclosure

requirements because the requirements vary according to the size and

nature of the benefit plan. For example, the officials said PWBA did not

discuss the Consolidated Omnibus Budget Reconciliation Act of 1985, Part

6 of title I, or disclosure requirements related to fiduciary regulations. The

agency officials also noted that ERISA contains general recordkeeping

requirements. For example, adequate records must be maintained to verify

the accuracy of benefit calculations and information reported in the

annual report.

PWBA said that the two companies’ 401(k) regulatory reporting and

disclosure responsibilities differed somewhat because of differences in the

companies’ plan size and operations. For example, it said because Minco

has a single-employer defined contribution 401(k) profit-sharing pension

plan subject to Part 1 of title I of ERISA covering 105 of Minco’s 129 eligible

individuals with assets held in trust, the plan administrator must file the

Form 5500 (with all applicable schedules) for each plan year. An annual

audit is required and an opinion of an independent, qualified public

accountant must also be filed. However, because Zaclon has fewer than

100 eligible employees, PWBA’s regulations allow Zaclon’s plan

administrator to file the Form 5500-C/R (with all applicable schedules),

which is an abbreviated Form 5500. Also, under PWBA’s regulations for

such small plans, an audit and opinion of an independent, qualified public

accountant is not required. Although in both companies, participants

covered by the pension plans and beneficiaries receiving benefits under

the plans must be furnished a summary description of the plan, a summary

of any material plan modifications, and a summary of each year’s annual

report. Both companies must also file their pension plan’s description and

modifications with DOL.

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PWBA also said that because Minco’s welfare plans cover 100 or more

employees, the administrator of Minco’s plans must file the Form 5500

(and all applicable schedules) for each plan year, but Minco is exempt

from the audit requirements because the plan was fully insured or

unfunded. Zaclon, with less than 100 participants in its fully insured or

unfunded welfare plans, is exempt from the Form 5500 report and the

audit requirements. PWBA officials said that both companies must furnish

their welfare plan participants a summary plan description; a summary of

any material modifications; and, for Minco’s welfare plan, a summary of

each year’s Form 5500 report. Minco must also file its welfare plan’s

description and modifications with DOL.

Conclusions Our work suggests that the number of federal regulations applicable to a

particular company may be substantial. However, producing a complete

inventory of those regulations is a very difficult undertaking for both

businesses and federal regulatory agencies. A business must have a

sophisticated level of knowledge of its regulatory environment and be able

to devote the time and resources needed to develop a comprehensive

inventory. Our efforts to acquire this information from federal agencies

demonstrated that regulatory requirements are contingent on a variety of

factors and can vary substantially from one company to the next, thereby

making this task more difficult than it appears to be.

Although most of the companies initially told us that they could develop a

complete list of regulations applicable to their companies, none of them

ultimately did so. The partial lists the companies did develop often

focused on only certain functional areas or certain problematic

regulations. The companies said their lists were incomplete because of

time and resource constraints and because of difficulties they experienced

disentangling federal regulatory requirements from their regular operating

procedures, state or local requirements, and other nonregulatory

requirements. Other participating companies did not provide a reason why

their lists were incomplete.

Because of their day-to-day involvement in regulatory matters, it may seem

logical that regulatory agencies would be able to determine the

applicability of their regulations to particular companies quite easily.

However, several of the agencies we contacted said they could not make

that determination without expending a substantial amount of their limited

resources. Several of the agencies said that unique characteristics of a

business or a business activity determine whether their regulations apply

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to that business. Therefore, they said they would have to collect detailed

information about each company to determine regulatory

coverage—information such as whether the firm (1) was a federal

contractor or subcontractor, (2) had a qualified retirement plan, (3) had an

underground storage tank, (4) used certain types of compressed gases, and

(5) discharged water into a local waterway.

The agencies also indicated that they made extensive amounts of

information available to the public, so the businesses themselves could

determine their regulatory responsibilities. However, these sources of

information often appear to be fragmented both within and across

agencies. As a result, a business attempting to determine its regulatory

responsibilities may find it necessary to contact multiple agencies, and

sometimes multiple offices within particular agencies, to collect the

information it needs. In some cases, responsibility for an issue may be

spread between two or more agencies, making it difficult for companies to

determine which agency or agencies should be called regarding that issue.

The increasing complexity of the federal regulatory environment makes

effective communication between regulatory agencies and the regulated

community even more important, and some agencies are taking steps in

that direction.

The difficulties businesses and agencies experienced in developing a list of

applicable regulations also suggest two other conclusions—one is an issue

of compliance and the other is a research concern. First, a business that

finds it difficult to list its regulatory compliance responsibilities may not

be fully aware of those responsibilities. As a result, the business runs the

risk of being out of compliance with regulations that it did not know were

applicable. Second, the development of a list of a company’s compliance

responsibilities is the first step in determining the impact of all regulations

on that company. If the list of regulations applicable to a company is

incomplete, any assessment of the impact of regulations on that company

will be equally incomplete. The difficulties businesses and agencies

described in developing company-specific lists of regulatory compliance

responsibilities suggest that the development of information on the costs

and benefits of regulations to those companies will be at least as difficult.

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To fairly assess the impact of regulations on businesses, one must

consider both the burden and the benefits of compliance. Of the two

issues, regulatory burden is generally considered to be easier to measure

than benefits. As mentioned in chapter 1, regulatory burden has been

described and measured in various ways, including the number of pages in

the CFR, the number of federal employees involved in regulatory activities,

and the number of paperwork burden hours imposed by federal

information collection requirements. One commonly cited measure of

regulatory burden is the cost associated with compliance with regulations.

In this chapter, we briefly discuss the ways regulatory costs could be

assessed, what we attempted to measure in this review, and what

company officials told us when we asked about the costs and other types

of burden associated with compliance with federal regulations to their

businesses. This chapter also discusses what businesses told us about the

benefits associated with federal regulations.

Measures of

Regulatory Costs Vary

Studies of regulatory costs vary in a number of ways, one of which is the

types of costs the studies attempt to assess. Direct costs are those that

regulated entities incur in the course of complying with regulatory

requirements. These direct costs include the wages and salaries of

workers carrying out regulatory responsibilities; capital expenditures (e.g.,

wastewater treatment facilities or safety equipment); employee training

expenses; and other costs incurred as a direct result of regulatory

requirements. Indirect or secondary costs include costs such as lost

productivity, decreased competitiveness, construction delays, or resource

misallocation. Still other costs include those associated with the

development and enforcement of regulations, not just costs borne by

regulated entities; therefore, these studies could include the budgets of

regulatory agencies.

Regulatory cost studies also vary in terms of the range of regulations

included within the scope of the study. Studies may focus on costs

associated with compliance with any regulatory requirements issued by

any agency, or on only selected regulations, such as those within certain

subject areas (e.g., environmental rules) or those issued by certain

agencies.

Cost studies also vary in terms of the types of costs considered

attributable to regulatory requirements. Studies could include all

expenditures by the regulated entity that are in any way related to the

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regulatory requirements at issue. In such studies, for example, if a

company spent a total of $1 million during the course of a year on worker

safety training and equipment, the full $1 million would be counted toward

the company’s regulatory costs. However, because the cost study includes

all of the company’s expenditures in this area, such an approach implicitly

assumes that the company would have spent nothing on worker safety

training and equipment during that year in the absence of regulatory

requirements. Because many companies probably spend some money to

protect their workers in the normal course of business, attributing those

expenditures to regulatory requirements is erroneous and overstates the

burden of regulations.1

 Another approach does not include all

expenditures in the measurement of regulatory costs, focusing only on the

incremental costs directly attributable to the regulations in question. If, in

the above example, the company had spent $600,000 on worker safety

training and equipment, regardless of any regulatory requirements, the

incremental cost attributable to regulations in that year would be $400,000

($1 million minus $600,000).

In a January 1996 description of “best practices” for preparing economic

analyses of significant regulatory actions, OMB said that the benefits and

costs of an action

“. . . must be measured against a baseline. The baseline should be the best assessment of

the way the world would look absent the proposed regulation. . . . All costs calculated

should be incremental, that is, they should represent changes in costs that would occur if

the regulatory option is chosen compared to costs in the base case (ordinarily no

regulation or the existing regulation) or under a less stringent alternative.”

Therefore, OMB recommends calculation of regulatory costs in incremental

terms, not the total expenditures in a regulatory area.

The scope of the cost studies we reviewed also varied widely. Some

studies, such as the work of Thomas Hopkins, attempted to estimate the

cost of regulations to the economy as a whole.2

 Hopkins included the

following five expenditure categories in his estimates of cumulative

regulatory costs:

• direct costs of environmental regulations;

1

GAO/GGD-94-28.

2

Thomas D. Hopkins; Cost of Regulation, a report to the Regulatory Information Service Center,

August 1991; “Federal Regulatory Burdens,” RIT Public Policy Working Paper, Rochester, N.Y.:

Rochester Institute of Technology, 1993; and Regulatory Costs in Profile, Policy Study Number 132, St.

Louis: Center for the Study of American Business, August 1996.

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• direct costs of other social regulations, including consumer safety, nuclear

safety, worker health, and worker security and pensions;

• direct costs of economic regulations, which include agricultural,

communications, transportation, energy, financial, construction, and

international trade regulations;

• transfers stemming from economic regulations, including transfers

stimulating exports and agricultural price supports;3

 and

• process costs of paperwork and reporting obligations, based upon the OMB

estimate of the number of hours spent on federal paperwork requirements.4

Totaling data from all five cost categories, Hopkins estimated in 1993 that

the cumulative cost of federal regulations to the economy would be

$607 billion in 1995.5

 However, some economists believe that one of the

elements of Hopkins’ study—transfer costs—should not be considered

part of the cost of regulations to the economy because transfers represent

a loss to one group and a corresponding benefit to another.6

 There are also

concerns about the accuracy of some of the data included in Hopkins’

analysis. For example, we have noted that not all burden is counted in the

preparation of OMB’s paperwork burden-hour estimate, and that which is

counted is often underestimated.7

Other studies have attempted to measure the costs of regulatory

compliance on individual businesses, not the economy as a whole. One

such study by Arthur Andersen and Company focused on 48 large

companies’ compliance with federal regulations during 1977.8

 The study

did not attempt to assess the companies’ cost of complying with all federal

regulations, focusing instead on six federal agencies and programs.9

3

Transfers are redistributions of resources within society, thereby placing a burden on some groups

while benefiting others. For example, agricultural price supports involve a transfer of resources from

consumers to farmers.

4

Hopkins, in his 1991 study, used a formula that multiplies the number of hours to complete all federal

paperwork requirements by $20 per hour. Tax forms accounted for about 80 percent of the estimate.

5

In 1996, Hopkins revised his 1995 cost estimate to $668 billion.

6

GAO/PEMD-95-18BR.

7

GAO/PEMD-94-3. In his 1996 study, Hopkins said that “[t]he regulatory cost estimates that appear in

this paper lay no claim to precision; both conceptual and empirical challenges make precision

unattainable.”

8

Arthur Andersen and Co., Cost of Government Regulation Study, a report to the Business Roundtable,

March 1979.

9

The six federal agencies and programs were EPA, EEOC, OSHA, the Department of Energy, the

Federal Trade Commission, and ERISA.

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Arthur Andersen auditors went to each company, instructed company

officials on what they considered to be allowable and unallowable

regulatory costs, and required company officials to estimate the amount

the company spent complying with the identified regulations. The study

used an incremental measure of regulatory cost, subtracting from the

companies’ total expenditures the amount the company would have spent

to achieve the objectives of the regulations had those regulations not been

in force. Using this methodology, Arthur Andersen estimated that the 48

companies’ total compliance costs in 1977 were $2.6 billion—an average of

more than $54 million per company. This cost can be compared with the

companies’ 1977 net income after taxes of $16.6 billion—an average of

about $346 million per company.

Companies Generally

Could Not Provide

Comprehensive,

Incremental Cost Data

To assess the burden of federal regulations on the 15 companies

participating in our review, we used an approach that was similar in some

respects to the approach used in the Arthur Andersen study. Like the

Arthur Andersen study, we asked each of the companies to provide

information on their direct incremental costs. However, unlike the Arthur

Andersen study, we focused on costs associated with complying with all

federal regulations during 1994, not just selected agencies and programs.

Also, we did not require the companies to estimate the costs associated

with regulatory compliance. Instead, we left it to the companies to provide

what information they believed was appropriate.

Because we wanted to be sure that the companies described their

regulatory costs consistently, we provided extensive instructions to the

companies regarding what should and should not be included in their

tabulations. (See app. I for the instructions provided to the companies and

the data collection instrument.) For example, because our focus was on

incremental costs, we told the companies that any costs that would have

been incurred in the normal course of business during that period should

not be included in their cost measures. Because indirect costs are more

difficult to measure, we told the companies to provide cost data on direct

costs and asked for examples of indirect costs. We also delineated other

types of costs that should be excluded from their tabulations, including

lobbying costs; costs associated with nonfederal rules; and payments to

the federal government, such as taxes and fines for noncompliance.

We asked the companies to include costs for all regulations that they had

identified in developing their aggregate list of federal regulations

(presented in ch. 2). We attempted to collect the cost data in total and in

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each of three cost classifications: (1) capital costs, (2) labor costs, and

(3) other costs.10 We told the companies that their accounting and

financial records should be their primary source of the cost data, and that

we would like to collect, or at least review, any documentation of these

costs.

Although all of the 15 companies participating in our review provided at

least some data on their compliance costs, none of the companies

provided cost data that were both comprehensive and incremental.11 Some

of the officials with whom we met recognized that the data provided were

not what we had asked them to provide. Our interviews with these

company officials and our review of the information they provided

revealed various reasons why the companies’ cost data were neither

comprehensive nor incremental.

Companies’ Cost Data

Were Not Comprehensive

Although we asked each of the companies to provide cost data for all the

regulations they faced, none of the companies provided comprehensive

cost data. The uncomprehensive nature of the cost data provided was

sometimes a function of the difficulty company officials had in citing all

applicable regulations. (See ch. 2.) Because we asked each company to

provide cost information for all applicable federal regulations, and

because company officials generally said they could not identify all

applicable regulations, they, therefore, could not provide a measurement

of their regulatory costs that they believed reflected all of their

responsibilities.

Another reason company officials said they had difficulty providing data

on their companies’ federal regulatory compliance costs was because they

found it difficult to distinguish between federal requirements and those of

other governmental jurisdictions. For example, officials from Roadway

told us that the intertwining of federal, state, and local requirements made

it difficult to separate the effects of each type of requirement. Also,

officials from the paper company said that determining their federal

regulatory costs was “difficult if not impossible” because they could not

distinguish between costs to comply with federal regulations versus state

10However, we also told the companies that if this system was not workable for them as a way to break

down their incremental compliance costs, they could use some other system.

11These results correspond with those of our recent work looking at the effect of regulatory

compliance on research grantees at the National Institutes of Health. We found that although members

of the research community were confident that compliance costs were high, they were unable to

provide cost data directly attributable to compliance activities. See Regulatory Compliance for NIH

Grantees (GAO/HEHS-96-90R, Mar. 25, 1996).

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and local requirements. Making this distinction was particularly difficult

for the companies in regulatory areas where state governments enforced

federal standards and could also attach additional requirements. Officials

from a company operating in California said that California enforces all of

OSHA’s regulations and some of EPA’s regulations—often adding stricter

state requirements.

In other cases, company officials recognized federal regulatory

requirements in certain functional areas but still did not provide any cost

data for those functional areas. For example, officials from the

petrochemical company provided data on environmental, health, and

safety costs, but did not provide data on costs associated with other types

of regulations with which they said they had to comply (e.g.,

transportation and shipping). The cost data the companies provided were

also incomplete in other ways. For example, one company provided data

on its incremental regulatory costs, but only for a portion of its labor

expenses.12 The company did not provide comprehensive data on capital

or other types of costs, and the labor cost data did not include the

company’s hourly workers.13

Also, although one company said its incremental cost estimate covered the

entire company, the manner in which the estimate was calculated revealed

that all units were not actually represented. Company officials estimated

the company’s total incremental regulatory costs at

$52.4 million—$44.9 million for labor costs, $6.8 million in capital costs,

and $700,000 in other costs. The officials said they developed these cost

figures by first generating these costs for their largest operating unit, then

doubling this figure to arrive at the estimated total cost. They said they

used this method because the operating unit generated one-half of the

company’s revenue and accounted for one-half of the company’s costs.

Therefore, they said that doubling the unit’s regulatory costs was a

reasonable estimate of the whole company’s incremental regulatory costs.

However, we believe that if their largest operating unit’s regulatory costs

were atypical in any way, simply doubling this estimate could result in an

12To obtain these data, the company surveyed its salaried employees and asked them to (1) develop a

list of the federal regulations that they encountered in doing their jobs and (2) estimate the amount of

time they or their subordinates spent each month complying with those regulations. Using the results

of this survey and its knowledge of the employees’ salaries, the company estimated its direct

incremental labor costs for salaried employees to be $145,000 in 1994—about 5 percent of its total

payroll of $2.5 million.

13Company officials provided cost data for certain problematic regulations, but did not provide any

other data on the company’s comprehensive, incremental costs. For example, the officials said that the

company spent $200,000 for capital improvements to its wastewater treatment facility and spent $1,000

per month for water testing to comply with specific EPA water quality requirements.

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underestimate or an overestimate of the company’s total incremental

costs.

Companies’ Cost Data

Were Not Incremental

Although we requested that companies provide incremental compliance

costs because we believe they are more accurate measures of regulatory

burden than total expenditures in areas covered by regulations, most

companies did not provide incremental cost data. As previously noted,

calculation of incremental costs requires company officials to decide what

actions their company would have taken in the absence of the identified

regulations—a determination that can be difficult, if not impossible, to

make in retrospect. For example, officials from Bank C indicated that it

would be very difficult, in most cases, to estimate what expenses they

would have incurred if the federal regulations did not exist. An official

from the glass company said that it was difficult to determine what

percentage of its costs were due to regulations and what part would have

been incurred as a normal part of business. Officials from the paper

company said a substantial amount of their costs were costs they would

have incurred even if federal regulations did not exist. They said that they

would still have formidable environmental and health and safety programs

simply as a good business practice, and they could not separate what was

required from what they were doing voluntarily.

Reflecting the difficulty in separating regulatory and business-related

costs, the officials also said their companies’ accounting and financial

records did not capture the information necessary to determine

incremental compliance costs. For example, officials from the

petrochemical company told us their company’s accounting systems were

not designed to uniquely categorize the costs of new and ongoing

regulatory requirements. These officials said that there is little incentive to

isolate and monitor these costs because such information has little

business value. Officials from Multiplex also said that their financial

records did not itemize many of the administrative costs associated with

specific regulatory compliance activities. Multiplex officials estimated that

for environmental compliance, about 60 to 70 percent of their costs were

captured using the company’s financial records.

Company officials also said they could not provide incremental regulatory

cost data because the companies’ regulatory responsibilities were

sometimes difficult to distinguish from their regular processes and

functions. For example, officials from the glass company said regulatory

responsibilities were woven into individuals’ jobs, and it was difficult to

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separate what was being done strictly for regulatory reasons. Officials

from the tank car company said it would take a significant amount of time

and resources to separate these compliance costs from their day-to-day

operations costs. Officials from the petrochemical company said there is

little incentive to isolate and uniquely monitor the explicit costs associated

with new and ongoing regulatory requirements because they generally

view regulations as nonrevenue-producing mandates.

Indirect Costs of

Federal Regulations

Although we did not ask the companies that participated in our review to

quantify their indirect costs of complying with federal regulations,

company officials provided a number of examples of those costs that they

said their companies had experienced. The examples indicate that indirect

costs can be substantial and are probably the most difficult types of costs

to measure. The types of indirect costs that the companies provided

included lost productivity, decreased competitiveness, lost business

opportunities, delays in the expansion of new products or businesses,

misallocation of resources, and delays in construction of new plants

and/or equipment. Examples of indirect costs the companies cited

included the following.

• Officials from the paper company said that regulations tie up company

resources and staff that could be better used in other ways, such as

developing new products or processes. They said the company’s

international competitiveness is also affected by regulations. The officials

said that, contrary to popular belief, European countries are less regulated

than U.S. companies, and as a result, U.S. companies are at a competitive

disadvantage.

• Representatives from the petrochemical company said that the company

had curtailed or forgone facility expansions because of regulations that

discourage voluntary emissions reductions at the plant site or emissions

trading programs that are too administratively burdensome. Company

officials also expressed concerns about regulations that restrict access to

potential natural gas markets even though the increased use of natural gas

is a cost-effective means of achieving emissions reductions. The officials

also referred to the unavailability of cash flow to capture business

opportunities because of the allocation of funds to compliance

requirements.

• An official from Minco, a federal subcontractor, said that regulatory

activity tends to drive out other human resource-related actions the

company would like to take. For example, she said that the company

would like to offer more training and employee development but cannot

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do so because January and February are generally dedicated to

development of affirmative action plans. Another Minco official said that

the company could make more money as a prime contractor but

intentionally remains a subcontractor because of the complexity of federal

procurement regulations.

• A Multiplex official commented on how responding to regulatory

requirements causes a delay of management information and

responsiveness to business-related needs. For example, the official said

that a company management team’s required involvement with an

18-month IRS audit slowed company management’s response to internal

requests and to other company business. He said a large company can

easily absorb a certain level of recordkeeping requirements, but the same

requirements can cause many problems for a smaller company like

Multiplex.

The Benefits of

Federal Regulations

The assessment of benefits is of equal importance to the measurement of

costs and other types of burden in assessing the impact of a given

regulation or regulations in general. However, as previously noted,

accurate measures of the benefits of regulations appear even more

difficult to develop than cost measures. For example, in 1991 we reported

that, although environmental controls have resulted in substantial and

valuable benefits, assigning a monetary value to these benefits was much

more difficult than estimating costs.14

Few Studies Have

Evaluated the Benefits of

Regulation

Much of the literature deals with the assessment of costs of regulations,

and relatively few reports and studies have addressed the benefits of

regulations. In June 1995, Public Citizen, a national consumer advocacy

organization, released a report that sought to document the benefits of

federal health and safety regulations.15 The report recognized that the

benefits of health and safety standards cannot always be measured in

dollar terms, and it highlighted the difficulty involved in attempting to

calculate the exact number of lives saved, injuries prevented, and costs

averted by a regulation. The report also criticized cost-benefit analysis by

maintaining that many of the variables used in the analysis are

unquantifiable, and in many cases the primary source of cost data is from

industry itself.

14Environmental Protection: Meeting Public Expectations With Limited Resources (GAO/RCED-91-97,

June 18, 1991).

15Saving Money, Saving Lives: The Documented Benefits of Federal Health and Safety Protections,

Public Citizen, June 1995.

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Most Companies We

Interviewed Agreed

Regulations Have Benefits

Despite the concerns the businesses expressed about the costs of

regulatory compliance, most of the company officials we interviewed

generally recognized that regulations provide benefits to society as a

whole, to certain groups and individuals, and even to their own

businesses. Company officials said federal regulations had helped protect

air and water quality, created safer workplaces, promoted fair

competition, and improved both the manufacturing process and product

quality. Specific examples of regulatory benefits the companies cited

included the following.

• Officials from the paper company said that compliance with federal

regulations had helped to improve their manufacturing process. They said

some of the dioxin regulations would make their paper manufacturing

process more effective and less costly, even though short-term costs could

be high. Company representatives added that solid waste regulations were

leading the company to use chemicals that are not as hazardous.

• Representatives of the hospital indicated that OSHA’s Blood-borne

Pathogens Standard had helped reduce the number of needlestick injuries

experienced in the hospital. They also said that the Clinical Laboratory

Improvement Amendment regulations encouraged laboratories to look

more closely at the quality of their work.

• Officials from the glass company said federal regulations had created

business opportunities for their company. They said the company created

its environmental products and pharmaceutical services businesses to

assist others in meeting their regulatory requirements of air pollution

control and product safety testing. Company officials also said that federal

regulations protected environmental quality, created safer workplaces for

employees, and protected businesses from unfair business practices by

their competitors.

• A Minco official said she believes the company’s requirement as a federal

contractor to create an affirmative action plan has aided in the

employment of a diverse workforce and fair employment practices.

Another official at the company said OSHA’s regulations have brought about

a greater awareness of job safety for both management and employees.

• Officials from Roadway, Zaclon, Bank B, and the glass company indicated

that federal regulations provide a level playing field of uniform

requirements for businesses. With this level playing field, federal

regulations preempt multiple and often different state and/or local

standards, making compliance easier and less costly. As pointed out by the

glass company, it can be far more costly to track and comply with 50

different regulations than to comply with a single federal regulation in a

given area.

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Conclusions Our work suggests that measuring the incremental impact—direct costs,

indirect costs, and benefits—of federal regulations on individual

companies is an extremely problematical endeavor. Although the

companies clearly experienced indirect costs associated with federal

regulations and recognized that those regulations provided benefits to

society and to themselves, our discussions with the companies also

indicated that measuring indirect costs would be extremely difficult. We

encountered a number of serious obstacles in our effort to assess even the

most straightforward of such costs—direct incremental costs.

Although all of the 15 companies participating in our review provided

some data on their regulatory costs, none could provide comprehensive,

verifiable measures of their direct incremental costs of complying with

federal regulations. As shown below, the companies described several

obstacles in the development of such information.

• As discussed in chapter 2, the companies did not produce a

comprehensive inventory of federal regulations applicable to their

operations. For example, the companies found it difficult to distinguish

federal regulatory requirements from those of other governmental

jurisdictions and from their normal business practices. Therefore, there

was no comprehensive basis for cost assessment.

• Companies could not isolate incremental regulatory costs because they

were unable to identify what costs would have been incurred in the

normal course of business operations without federal regulations.

• Companies’ financial information systems were not geared to identifying

costs associated with regulation.

These difficulties do not necessarily mean that regulatory costs are not

substantial or that the measurement of those aggregate costs is

impossible. However, they do suggest that serious conceptual and

methodological questions need to be raised and answered before studies

that attempt to measure total current regulatory costs are used to guide

public policy. The following are examples of such questions.

• Which regulations are included in the universe for which cost measures

are developed?

• If federal regulations are the focus, how were they distinguished from

those of other jurisdictions?

• Are incremental regulatory costs being measured?

• If so, how did the researcher determine what businesses would have spent

in the absence of regulations?

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• What financial records were used to substantiate the cost figures, and

what assumptions guided the collection of the data?

Users of studies of regulatory costs need to be aware of the inherent

difficulties and assumptions involved in producing such measures.

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Companies’ Regulatory Concerns Focused

on Regulations and Regulators

To this point, this report has attempted to assess the impact of federal

regulations on selected businesses by focusing on aggregates—the total

number of regulations applicable to a company and the aggregate burden

(cost and other) of those regulations. Another way to understand the

impact of regulations is to examine the concerns those businesses have

about the particular regulations that comprise that aggregate.

In a June 1994 study, we used this type of approach to obtain comments

on a defined set of federal regulations.1

 Employer and union

representatives in selected businesses were asked about their experiences

in dealing with 26 statutes and 1 executive order on workplace regulation,

including the ADA, the Equal Pay Act, and the Service Contract Act. In

summary, both groups generally supported the need for workplace

regulations but voiced concerns about the operation of the overall

regulatory process. For example, many of the employers said that certain

paperwork requirements had questionable value. These employers also

said that the regulatory approach used by many agencies was largely

adversarial, characterized by poor communication, unfair and inconsistent

enforcement, and vague laws and regulations. Both employers and union

representatives called for agencies’ providing a more service-oriented

approach to workplace regulation; improving information access and

educational assistance to employers, workers, and unions; and permitting

more input into agency standard-setting and enforcement efforts.

In this study, we asked officials representing the 15 participating

companies to identify the specific federal regulations that they considered

most problematic for their organizations. We also asked those officials

what government (Congress or federal agencies) and businesses could do

to address either the problems they identified or the federal regulatory

process in general. In our instructions to the companies, we defined

“problematic regulations” as any federal program, regulation, or law that

the officials viewed as causing their companies the greatest difficulty. We

said a regulation could be considered problematic for a variety of reasons,

such as being too costly, too vague, unnecessary, or duplicative.

In contrast to the difficulties the companies experienced in compiling an

aggregate list of regulations and determining incremental regulatory costs,

all 15 companies provided examples of what they considered to be their

most problematic regulations. In total, we received more than 100 such

concerns from the participating companies. We developed written

1

GAO/HEHS-94-138.

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summaries of each of the companies’ concerns and verified the accuracy

of those summaries with company officials.

We then sent the verified summaries to the appropriate regulatory

agencies for their review and comments. In some cases, the agencies said

that they needed more information to allow them to respond to the

companies’ concerns. For example, one agency said it needed to know the

state in which a company was located so that it could be certain that the

company’s concern involved a federal regulation and not a state or local

regulation. In those cases, we attempted to obtain additional information

from the companies or permission to disclose information we already had

that could address the agencies’ questions. We were usually able to

provide the agencies with the additional information they said that they

needed. However, in some cases we could not provide the information

because doing so could have led to the identification of companies that

wanted to remain anonymous. In those cases, the agencies responded as

best they could with the information that was available to them.

By obtaining and presenting agencies’ responses to the companies’

concerns, we attempted to present a balanced picture of the regulatory

issues involved. However, it is important to note the limitations of this

methodology and presentation sequence. The companies were able to set

the agenda by specifying the topics to which the agencies had to respond.

Also, although agencies could question or dispute the companies’

concerns about regulatory issues, we did not give companies a comparable

opportunity to respond to the agencies’ assertions. Lastly, agencies had the

final word regarding the companies’ concerns, but this presentation

should not be interpreted to imply our agreement with the agencies’

positions regarding these issues.

Companies Expressed

Concerns About

Regulations and

Regulators’ Actions

The 15 companies’ regulatory concerns varied substantially. Many of these

concerns were about specific federal regulations, but others focused on

federal regulatory agencies’ actions and the interrelationship between

regulations at other levels of government. After analyzing them, we

grouped the companies’ concerns into the following 10 broad themes:

(1) Compliance with a regulation was costly and/or those costs

outweighed the benefits provided by the regulation.

(2) The compliance costs associated with a regulation affected the

companies’ competitiveness.

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(3) The regulation at issue was unreasonable (e.g., it was not scientifically

based).

(4) The requirements associated with a regulation were difficult to

understand, either because of the technical language involved or because

the requirements kept changing.

(5) Certain regulatory requirements were unnecessarily rigid or inflexible.

(6) The paperwork or process requirements associated with a regulation

were excessive and costly.

(7) The penalties imposed on companies for noncompliance were too

severe.

(8) Regulators were overly deficiency-oriented or had a “gotcha”

enforcement approach.

(9) Regulators lacked knowledge of industries and provided little

assistance to businesses trying to comply with the regulations.

(10) Regulations from different agencies or levels of government were

poorly coordinated or duplicative.

About half of the concerns that the businesses expressed included

elements of more than 1 of these 10 themes. For example, 14 of the

companies’ concerns indicated that certain regulations were both too

costly and unreasonable. Similarly, a number of concerns involved both

paperwork issues and regulatory costs. Some individual concerns included

as many as five themes.

Each of the 10 company concern themes is discussed below along with the

associated comments from the regulatory agencies. Like the companies’

concerns, the agencies’ comments varied substantially. In some cases, the

agencies agreed with the companies’ concerns and said that actions had

been taken or needed to be taken to address those concerns. In other

cases, the agencies disagreed with the companies’ portrayal of an

enforcement action or of a regulation’s requirements. In still other cases,

the agencies said the companies’ concerns were a function of the

regulations’ underlying statutory requirements.

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Appendix II contains a sample of the companies’ concerns and the

applicable agencies’ responses for each of the 10 themes.

Companies Said

Regulatory Compliance

Was Costly or Costs

Outweighed Benefits

Company officials most frequently expressed concerns about the cost of

complying with particular federal regulations. Representatives of 14 of the

15 companies mentioned this concern about at least one regulation. For

example, one official said DOT-required hazardous materials training cost

the company $475,000 annually. Another company official said that as a

result of changes to CAA’s regulatory requirements, the cost of air quality

testing, which was needed to get approval of a construction permit,

increased from $10,000 to $30,000.

In response to these concerns, the agencies most frequently said that the

companies had overstated regulatory compliance costs. For example, EEOC

and DOJ raised questions about the $750,000 Roadway said it spent to

comply with ADA requirements. Both agencies said that practical

experience to date indicates that the cost of ADA compliance is limited.

EEOC cited a study commissioned by Sears, Roebuck and Co. showing that

less than 3 percent of the accommodations that Sears made to comply

with the ADA cost the company more than $1,000. In several cases,

agencies said the costs incurred by the companies might be a function of

the way that they complied with the regulations. For example, one

company said that OSHA required them to replace certain electrical

receptacle boxes with more expensive ones. In response, OSHA said the

company only had to abate the electrical hazard, and it was up to the

company to decide how to accomplish that goal. According to OSHA

officials, the company could have found other ways to power its

equipment or used other, less expensive receptacle boxes available for

indoor use. OSHA officials added that their standard is consistent with the

national electrical code, which is recognized by most authorities as a safe

way to provide electrical energy to buildings.

A number of companies also said that they believed the costs associated

with compliance with certain regulations outweighed any regulatory

benefits. Many companies said they found it difficult to see any benefits

associated with the regulations they mentioned, either to themselves or to

society in general. Other companies said they did not mind spending

money to comply with federal regulations, but not when costs exceeded

the benefits. For example, some companies said that although they had

substantially met the goals set in particular regulations, total compliance

would be extremely costly and would far outweigh any marginal benefits

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provided by those increased costs. In other cases, two companies

mentioned having to retrofit machinery and/or train more employees than

necessary to satisfy certain regulatory requirements—expenditures that

they said were unnecessary and yielded no apparent benefits.

Agencies responding to these concerns frequently said that the companies

did not recognize the benefits that the regulations provided and/or that

they overstated the costs. Another common agency response was that the

company had misstated or misinterpreted the regulatory requirement. In

several instances, the agencies said that the particular regulatory

procedure mentioned by the company was required by law. For example,

one company said that the nondiscrimination test IRS requires in the

administration of the company’s 401(k) thrift savings plan was costly, and

that the IRS requirement for a separate audit of the plan was an

unnecessary expense. However, IRS said that both of these requirements

were imposed by statute. In other cases, though, the agencies agreed with

the companies’ cost concerns and said they had taken or were taking

action to make regulatory compliance less costly.

Examples 1 through 4 in appendix II illustrate companies’ concerns and

agencies’ responses relating to cost and cost-benefit issues.

Companies Said

Regulatory Costs Affected

Competitiveness

Nine companies indicated that the costs associated with compliance with

certain regulations were a disincentive to their investment or expansion

decisions, or otherwise affected the companies’ competitiveness in the

marketplace. Some of the companies said that particular regulations

prevented them from expanding their operations because their compliance

costs would increase disproportionately to the profits they expected to

generate from the expansion. Other companies said that compliance costs

imposed a potential liability that discouraged investment. Still other

company concerns were that some regulations applied to only certain

types of businesses, thereby giving a competitive advantage to similar

businesses that were exempt from those regulations.

In response, the agencies often acknowledged that regulatory compliance

costs could affect companies’ competitiveness and/or flexibility of

decisionmaking. However, they frequently said that the requirements in

question were statutorily mandated. Several agencies also indicated that

the regulations in question were necessary and yielded benefits that the

companies did not mention. In several cases, the agencies said they were

working to improve the operation of the regulations the companies cited

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as inhibiting competition, making them more consistent, flexible, or less

burdensome. For example, one company said it would not purchase

property that had previously been the site of industrial operations because

of the potential cleanup liability under the Comprehensive Environmental

Response, Compensation, and Liability Act. Thus, the company felt that its

options for choosing new sites were restricted at a time when it needed

property for business expansion. EPA responded to this concern by

indicating that it has initiatives under way to encourage economic

redevelopment through environmental cleanup. Also, EPA said it has

encouraged redevelopment of these sites by reassuring prospective new

owners that they may not have to face Superfund liability.

Also, some agencies’ responses indicated that the way in which companies

chose to comply with the regulations could have affected their costs. For

example, Bank C said that it had to create 15 new forms as a result of a

regulatory requirement, but FRB said that there was no requirement that

bank personnel had to complete forms to accomplish the goal of the

regulation.

Examples 5 and 6 in appendix II illustrate two of the companies’ concerns

and agencies’ responses relating to the effect of regulatory costs on

competitiveness.

Companies Said

Regulations Were

Unreasonable

Twelve of the 15 companies said that certain regulations they dealt with

were unreasonable because they were either (1) not based on sound

scientific research, (2) outdated, (3) unlikely to achieve their intended

goals, or (4) unreasonable for some other reason. For example, officials of

the paper company objected to a DOT requirement that each of the

company’s several hundred locations submit drivers’ logs and other

documents to the company’s headquarters to help DOT’s review. The

company thought it was impractical and unnecessary to maintain all of the

drivers’ logs in one place. In another example, the paper company alleged

that title V of CAA requires the regulation of extremely low levels of

emissions, and that the company was required to obtain a permit for

methanol emissions at the company’s fence line that are no more

concentrated than in a person’s breath.

The regulatory agencies frequently disagreed with the companies’

characterization of their regulations as unreasonable. In about half of

these areas of disagreement, the agencies said that the regulations did, in

fact, have a rational basis and/or provided benefits the companies did not

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acknowledge. For example, EPA officials said that the paper company’s

concern creates the misleading impression that paper mills are subject to

title V only for low levels of methanol emissions when, in fact, large

emissions of other pollutants would easily justify the need for a title V

permit even if the mill had no methanol emissions.

In the other half of these cases, the agencies said that the companies had

mischaracterized the regulation or the incident involved. For example,

hospital officials questioned the reasonableness of what they described as

a revised Federal Aviation Administration (FAA) rule that shortened the

shift lengths of helicopter pilots. However, FAA said that the shift length

rules had not recently changed. In several other instances, the regulatory

agencies said that the regulatory provisions the companies characterized

as unreasonable were required by law. For example, HUD officials said that

disclosure requirements that bank officials said were unreasonable were

established by Congress in specific provisions of the Real Estate

Settlement Procedures Act (12 U.S.C. 2601 et seq). However, in some cases

the agencies agreed with the companies’ concerns about the

reasonableness of regulations, and said that they or Congress had taken or

were taking steps to minimize the problems the companies had

experienced.

Examples 7 through 10 in appendix II illustrate companies’ concerns and

agencies’ responses relating to the reasonableness of regulatory

requirements.

Companies Said

Regulatory Requirements

Were Difficult to

Understand

Most companies said they did not understand certain regulatory

requirements because they were vague or complex. As a result, the

companies said they had difficulty determining whether regulations

applied to them and, if so, what they needed to do to be in compliance.

Some companies cited confusing, ambiguous, or conflicting terminology

used in the regulations themselves or on the required forms. Some

companies said they were not able to obtain clarification of the

regulations’ requirements from agency staff. Other companies said they

had to hire outside consultants to explain the requirements or complete

the forms, but even those experts are sometimes not able to help them.

For example, paper company officials said OSHA regulations require their

paper machines to have mechanisms that will stop the machines “quickly,”

but the rule does not define what “quickly” means, and experts do not

agree on a single definition.

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In many instances, the regulatory agencies agreed with the companies that

the regulations cited in their concerns were vague and/or complex. The

agencies often said that some kind of action had been taken or was being

taken to clarify the regulations and make them less complex. For example,

regulators frequently cited direct compliance assistance, written guidance,

simplified processes, toll-free telephone numbers, computerized bulletin

boards, and presentation of examples within the regulations themselves as

ways that they have tried to make the requirements more understandable.

In several instances, the regulators said the complexity of the regulations

in question—particularly IRS regulations—was a function of the law or

actions taken by Congress. In other cases, the regulators indicated that the

regulations were complex because of the inherent complexity of the

subject matter being regulated.

Companies also said they did not understand regulatory requirements

because of frequent changes to the regulations, thereby making it difficult

to stay up to date and know what was required to be in compliance. For

example, officials from the hospital said that it was difficult to keep pace

with the frequently changing Medicare and Medicaid billing rules, which

caused the hospital’s computer programmers to spend numerous hours

attempting to update the automated patient billing system.

In virtually every case where a company complained about frequent

regulatory changes, the agencies said that the changes were caused by

congressional, not agency, action. For example, in response to bank

officials’ concerns about frequent changes in the tax code, Department of

the Treasury officials indicated that the changes were initiated by

Congress. Treasury officials said they had urged Congress to stabilize the

tax code so that taxpayers and their advisers could understand its

requirements. FDIC officials said that the number of changes and the level

of detail in their call reports were driven in part by statutory requirements.

Examples 11 through 13 in appendix II illustrate companies’ concerns

about regulations that were vague, complex, and/or frequently changing

and agencies’ responses to those concerns.

Companies Said

Regulations Were

Inflexible

Many companies said some federal regulations that they have to comply

with were unnecessarily inflexible or rigid. The companies expressed

frustration with the same standards or regulations being applied to all

companies, locations, or situations without any consideration to other

factors that they believed should be taken into consideration. Some

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companies felt that in certain regulatory situations, a variety of factors

should be considered in determining whether a company should have to

comply with that regulation. Examples of the factors the companies

believed should be considered included the number of employees in a

company, the extent to which a company uses a particular chemical, and

the amount of pollutant discharged as the result of a company’s process.

For the most part, the agencies disagreed that the regulations or the

situations the companies cited were examples of unnecessary inflexibility.

In some of the situations the companies described, the agencies said that

the requirements were justifiable regardless of other factors that the

companies believed should be taken into consideration. In other cases, the

agencies said that the regulations the companies cited already had some

flexibility built in or that the companies had misunderstood the process or

the regulation cited. In some cases, the regulators said that there was no

need for the regulations to be more flexible because the standards the

company cited were not even applicable to the situation the company

described.

Examples 14 and 15 in appendix II illustrate companies’ concerns and

agencies’ responses about regulations that are considered to be inflexible.

Companies Said

Paperwork and Process

Requirements Were

Excessive or Costly

Officials from 14 of the 15 companies said certain regulations’ paperwork

or other procedural requirements were excessive. The paperwork that

company officials cited as problematic included (1) forms or reports that

had to be periodically submitted to federal agencies and/or kept for their

own records and (2) permit applications that had to be submitted to an

agency to obtain approval for certain company activities.

Most of the paperwork or process costs the companies mentioned related

to labor costs associated with having their employees complete the

required forms or reports. For example, the hospital said it had to hire a

consultant for $50,000 to help complete the annual Medicare cost report.

Two of the companies indicated that they would not mind bearing the

expense of preparing regulatory reports if they felt the reports were

actually used by federal agencies. For example, Bank B considered the

reporting requirements under the Bank Secrecy Act to be of negligible

value to law enforcement agencies. Bank officials said they had seen little

evidence of law enforcement agencies’ using the information and few

prosecutions resulting from information in these reports. Other

companies’ concerns focused on the costs associated with having to

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prepare similar reports for regulators at the federal, state, and/or local

levels.

Agencies responding to these concerns most frequently said they agreed

that the paperwork or procedural requirements could be expensive. They

also said their agencies had taken or were taking action to address the

companies’ concerns. In several other instances, the agencies said that the

costly paperwork or procedures were required by law. For example, in

response to the hospital’s concern about the annual Medicare cost report

being a burden to prepare, HHS officials said that the Social Security Act

requires the agency to maintain a system of cost-reporting for prospective

payment system hospitals, including annual information to settle costs

associated with health care services rendered to Medicare beneficiaries. In

about half of the other responses, the agencies said that the companies

had misinterpreted or misstated the paperwork or procedural

requirements; therefore, they were incurring unnecessary expenses. For

example, although one company complained that they had to keep certain

employee safety training records “forever,” OSHA said that no such

employee training records were required and, therefore, no retention

requirement existed.

Examples 16 through 19 in appendix II illustrate companies’ concerns and

agencies’ responses relating to paperwork and process issues.

Companies Said

Regulatory Penalties Were

Too Severe

Many companies expressed concerns that the penalties imposed on them

for noncompliance with regulations or their requirements were too severe.

For example, the glass company said sizable penalties had been imposed

on them for procedural “mistakes,” such as not filing pension-related

paperwork on time. Another company said it was fined several hundred

thousand dollars for not obtaining a federal wastewater discharge permit.

The company thought the penalty for this offense was too severe given

that the company had a state permit that it believed was sufficient. In

addition, a Metro Machine Corporation official said OSHA currently holds

companies, rather than individual employees, accountable for violations

caused by employee negligence or willful removal of company-installed

safety devices. He said OSHA should differentiate between corporate

negligence and employee responsibility.

In response to these concerns, the agencies most frequently said that the

penalties the companies cited would be imposed only in the most

egregious circumstances. For example, in response to the Metro Machine

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Corporation concern, OSHA said that when it conducts an inspection and

determines that a company’s management is attempting all reasonable

steps to comply and get employees to comply but the employees are

systematically refusing to comply with safety and health standards or

rules, OSHA will excuse the employer from a violation. OSHA officials added

that the Occupational Safety and Health Act does not permit citing

employees for violations. In another response, EPA said two companies’

concerns about possible imprisonment of company officials for failing to

disclose certain information would be imposed only in instances where

those officials had knowingly falsified information or willfully failed to

provide the required public notice of the release of a hazardous substance.

Agencies also said that the penalties the companies complained about

were established in the underlying statutes and, in other cases, that the

agency had taken or would take action to address these concerns about

the severity of certain regulatory penalties.

Examples 20 and 21 in appendix II illustrate companies’ concerns and

agencies’ responses to penalty issues.

Companies Said

Regulators Had a “Gotcha”

Enforcement Approach

Officials from more than half of the companies cited incidents in which

regulators evidenced a “gotcha” manner or were more interested in finding

companies in noncompliance with regulatory requirements than helping

companies comply with the regulations. For example, one company said

an IRS official unexpectedly visited its facility and, in a “nasty” manner,

threatened to close the company down if the company did not immediately

remit taxes that were reportedly unpaid. In another instance, a company

said that EPA could initiate enforcement actions even when companies

self-report deficiencies. Company officials also cited examples in which

regulators were more focused on procedural or administrative issues (e.g.,

filing timely reports) than on whether the objective of the regulation was

being achieved (e.g., less air or water pollution from their manufacturing

processes).

The agencies responded to the companies’ comments in a variety of ways.

The agencies often said that (1) their enforcement approaches were

reasonable and consistent with their policies, (2) the companies had

mischaracterized the incidents or the rules involved, or (3) they have or

will take action to minimize these problems. For example, OSHA said that it

had used citations and penalties as workforce performance measures in

the past, but said it has now “put a stop to that practice.” EPA said that in

1995, it revised its policy to generally reduce or eliminate penalties when

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violations are self-disclosed and corrected. In response to the company’s

concern about the IRS employee’s demand for immediate payment, IRS said

it did not approve of employees who do not follow IRS procedures that

require employees to do their jobs in a professional, ethical, and fair

manner.

Examples 22 and 23 in appendix II illustrate the types of concerns

companies had about how agencies enforce their regulations and the

agencies’ responses to those concerns.

Companies Said

Regulators Were Not

Always Helpful or

Knowledgeable

Some companies said regulators were uninformed about the regulations

they enforced and did not understand the business practices of the

companies they regulate. For example, one company said IRS auditors who

conducted an audit of their company in 1994 were not knowledgeable

about business accounting practices or IRS rules. Also, some companies

said regulators were not very helpful when the companies sought

assistance. For example, although the tank car company repeatedly tried

to obtain clarification from EPA about the meaning of the term

“approaching atmospheric,” the company said it was unable to get any

assistance from EPA. In another case, officials from the fish farm said they

had difficulties getting assistance from DOL on how to interpret the Family

and Medical Leave Act (FMLA) regulations when an employee is on leave

under FMLA and does not intend to work after the leave period.

Relatedly, officials from some companies said agencies do not always

provide companies with sufficient opportunities for input into the

rulemaking process or adequately consider the comments they receive

during that process. For example, Bank B said that although the bank

provided comments on Regulation C and Regulation DD, it did not believe

the Federal Reserve addressed its concerns before finalizing the two

regulations.

Agencies responded in various ways to the companies’ concerns about

regulators’ lack of knowledge and assistance. In a few cases, the agencies

indicated efforts were under way to improve their staffs’ knowledge of the

industries they regulate. For example, IRS said it was working to develop a

highly skilled frontline workforce that is more knowledgeable about

different industries. In a response to a concern about lack of assistance,

OSHA said it has implemented a number of information-dissemination

projects and plans to undertake new initiatives to improve the availability

of safety and health data to the public.

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In response to the rulemaking concerns, agencies said companies usually

get the opportunity to provide comments as a rule is being developed.

Also, one agency said that while all comments received are considered,

these comments cannot always be incorporated in the final regulation. For

example, OSHA said it had been working with stakeholders to identify the

most pressing new priorities for agency action and had stepped up its

efforts to involve business and labor in the entire regulatory process.

Examples 24 and 25 in appendix II illustrate companies’ concerns and

agencies’ responses about regulators’ level of knowledge, the rulemaking

process, and the availability of assistance from regulators.

Companies Said

Regulations Were

Duplicative and Poorly

Coordinated

Some of the companies described what they believed were conflicting

regulatory requirements from different federal agencies or, in some cases,

from the same agency. For example, officials from the paper company

claimed that sections of OSHA’s pulp and paper standards (29 C.F.R.

1910.261) conflicted with other OSHA regulations, leaving company officials

confused about what to do. Officials from this company also said DOT and

OSHA had different and conflicting standards for defining corrosive

materials. We also heard concerns about overlapping and duplicative

regulations between federal and state or local agencies. Multiplex said that

EPA required the local sewer district to test the company’s sewer

effluent—the cost of which was charged to the company—and then the

local sewer district required Multiplex to perform the same tests.

In response to the companies’ concerns about coordination and

duplication issues, several of the agencies’ responses indicated that action

has been or will be taken to remedy any further or potential confusion

about regulatory requirements. For example, OSHA said it had been

working closely with EPA to develop uniform process safety management

standards to protect workers from accidental chemical releases. Also,

some agencies indicated that the companies had mischaracterized the

regulations or other factors in the companies’ concerns. In response to a

company’s concerns about the overlap between FMLA and the ADA, DOL said

the laws contain differing employee protections that serve distinctly

different purposes. However, OSHA officials also said that on July 22, 1996,

OSHA published proposed regulations to eliminate duplicate or redundant

standards from its rules.

Examples 26 through 29 in appendix II illustrate the companies’ concerns

and agencies’ responses about coordination and duplication issues.

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Companies Suggested

Ways to Address

Regulatory Problems

and Improve

Relations With

Regulators

We also asked companies for suggestions on what government and

businesses can do to address their regulatory concerns. Although most of

the companies’ proposals focused on actions that they believed regulatory

agencies and/or Congress should take, they also suggested some steps

businesses could take to make federal regulations less problematic.

Companies Wanted Fewer

Regulations

Some of the companies said they simply want fewer regulations, or at least

a halt in the growth of regulatory requirements. They suggested that the

federal government could accomplish these goals by taking the following

actions:

• eliminate one old regulation for every new regulation issued,

• review existing regulations for their relevance, and

• eliminate paperwork and other regulatory requirements that are not

related to the intent of the underlying statute.

Companies Wanted

Assurance That Costs

Justify Benefits

Officials from some of the companies said that if the federal government

cannot reduce the total number of regulations, at a minimum, they wanted

an assurance that the benefits of compliance justify the costs. To do this,

officials suggested that regulators do cost-benefit analyses before issuing

regulations. Another official said cost-benefit analyses could address the

issue of “bad science” underlying some regulations, and could result in

agencies’ implementing only regulations that have proven benefits.

However, another company official said he had difficulty envisioning how

a sound cost-benefit analysis could work. He suggested that each

regulation should have a sunset date and, before reauthorization, the

responsible agency should determine whether the regulation was

achieving its original intent.

Companies Wanted

Flexibility to Determine

How to Comply With

Regulations

Some company officials said that regulations should focus more on

outcomes than on the processes of achieving the outcomes. According to

these officials, one way to achieve this would be to give individual

companies the flexibility to determine the best processes to achieve the

desired goals. For example, an official from the petrochemical company

said:

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“. . . government should move away from the current ’specification based’ regulatory

process and toward a new approach in which government and business jointly establish

performance-based environmental, health, and safety standards. Government and business

should both be accountable for achieving measurable, quantifiable objectives. Goals would

be accomplished in a stepwise fashion, improving cost effectiveness by allowing parties to

learn from what works. Government and business should work cooperatively and share the

burden for obtaining information and demonstrating results. A peer review procedure

could be used to maintain the quality and integrity of the process. Over time, the process

would force industry and regulators toward low-cost, high impact solutions with proven

effectiveness. Market-based incentives could be widely used, as there are currently few

incentives for business to remedy the environmental impact of its operations. The new

paradigm would allow those closest to a problem to solve it in the most cost-effective

manner . . . .”

Officials from another company agreed with this assessment, adding that

the federal regulatory process could be improved if laws were developed

that address general goals and objectives and were of long duration. The

officials suggested developing long-term strategies that make laws less

susceptible to short-term political whims. Another company official said

Congress’ tendency to be prescriptive and specific in writing legislation is

driven even further by lobbyists on both sides of the issues. The official

said that agencies would do a better job of writing sensible regulations if

the legislation were less constraining.

Companies Wanted More

Assistance and Support

From Regulators

Many of the company officials said that regulators should offer companies

more assistance as they try to comply with federal regulations.

Specifically, the officials said that regulators could

• adopt a partnership approach with companies to help them to comply with

regulations,

• serve as consultants to companies,

• provide companies with compliance training,

• support companies that make reasonable attempts to comply with

regulations,

• give companies a chance to correct regulatory violations before being

penalized,

• hire credible and technically competent staff, and

• use review commissions to assist businesses in compliance with

regulations.

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Companies Suggested

Ways They Could Improve

the Regulatory

Environment

Although officials of several companies clearly believed that the federal

government could make changes to improve the regulatory environment,

some officials also believed that companies had a role to play in that

regard. They suggested several actions that businesses could take to make

regulations less problematic, including the following:

• devote more time to commenting on proposed regulations during the

rulemaking process;

• devote sufficient resources to becoming more knowledgeable about

regulatory issues;

• ensure that company management and employees are trained to properly

administer regulations;

• participate in trade and professional organizations that interact with

Congress and federal agencies;

• ensure that top management supports a regulatory compliance strategy;

• modernize and make better use of information processing systems; and

• increase their employees’ awareness of the seriousness of complying with

federal regulations, the potential for problems related to noncompliance

(e.g., an increase in job-related injuries), and the fines that could be

imposed on them or the company for failure to comply.

Many of the suggestions from the companies were consistent with the

agencies’ regulatory improvement goals. For example, several of the

agencies said they have, or were planning to implement, active outreach

programs that disseminate information to the companies through written

communications, seminars, toll-free telephone numbers, and computer

bulletin boards. In addition, several agency officials said they are in the

process of systematically eliminating outdated and impractical regulations.

Two agencies said they were shifting to a results-oriented focus because in

the past their agencies focused too heavily on processes and activity. DOL

officials said they intend to make greater use of negotiated rulemaking—a

process in which representatives of the government and all interested

parties, including employers, actually draft the proposed rule for public

comment.

Conclusions The 15 participating companies provided us with a lengthy and varied list

of regulatory concerns, the most common of which involved the cost of

regulatory compliance. The companies also frequently said that federal

regulations were unreasonable or inflexible, paperwork was excessive,

regulatory requirements were difficult to understand, and regulators had a

“gotcha” enforcement approach.

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Companies’ Regulatory Concerns Focused

on Regulations and Regulators

Many of the regulatory agencies indicated that they were aware of the

companies’ concerns and, in a number of cases, the agencies said that they

were taking or had already taken action to alleviate the problems. In

several other cases, the agencies said that the companies’ concerns were a

function of the statutes underlying the regulatory requirement. However,

in many instances, the agencies disagreed with the companies’ comments,

frequently saying that the companies did not recognize the benefits of the

regulations or the companies mischaracterized, misstated, or

misinterpreted the regulations involved.

The companies’ concerns and the agencies’ responses indicate that

communications between the companies and the agencies are not always

effective. Companies do not seem to have enough information about their

regulatory responsibilities, and they may be reluctant to seek that

information from regulatory agencies. Agencies, on the other hand, have

an array of information about their regulatory requirements; however, they

do not appear to be getting the information to companies in such a way

that the companies understand what regulations are applicable to them

and how to comply with those regulations.

The companies and the agencies had several suggestions to alleviate this

communication gap and improve relations between them. Some of these

suggestions were consistent with agencies’ regulatory improvement goals.

For example, the companies indicated they wanted more information

made available to them about regulatory compliance. Meanwhile, the

agencies said they were using or were planning to implement a number of

outreach programs, including seminars, computer bulletin boards, and

toll-free telephone numbers. However, the degree to which these various

informational mechanisms will improve the flow of communication will

depend to at least some extent on whether they are integrated, easy to use,

and provided in a manner that businesses are willing to use them.

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Government regulation, particularly at the federal level, has long been the

subject of public debate. At times, that debate has been extremely

contentious, with opponents and defenders of federal regulatory policy

staking out very different positions. Opponents contend that some federal

regulations are not needed and those that are needed often have become

too burdensome. Therefore, opponents believe agencies’ regulatory

authority should be limited and closely scrutinized. Those defending

federal regulations do not want to unnecessarily impose burdens but

contend that federal regulatory standards are needed to provide certain

societal benefits, such as safer transportation, cleaner air and water,

greater workplace safety, and protection for some individuals and groups.

Nevertheless, a consensus has emerged within government that the federal

regulatory process needs reexamination. Both Congress and the executive

branch have initiated efforts to improve that process. A number of

legislative proposals have been introduced in the 104th Congress to

change the federal regulatory process. Several of those changes have been

enacted, including new paperwork reduction goals and new judicial

review processes. Congress has even made itself part of the regulatory

review process by instituting an expedited process to reject agency rules

that it finds objectionable. The administration’s regulatory reform efforts

have addressed a number of areas as well, including eliminating and

revising existing regulations; changing the performance measures of

agencies and regulators to focus on results, not process and punishment;

and working with the regulated community in the development of new

regulations.

A great deal of the debate about federal regulation has centered on

whether the burdens associated with federal regulations outweigh the

benefits that those regulations are intended to provide. A number of

attempts have been made to measure the burden of federal regulations.

Some of these measures are only indirect indicators of regulatory burden

(e.g., the number of regulators and the number of pages in the CFR). Other,

more direct measures are of questionable validity (e.g., paperwork

burden-hour estimates). For example, one study of the direct cost of

federal regulations estimated that their cost to the economy would be

$607 billion in 1995. However, the validity of this estimate has been

questioned by economists and others.1

 Other studies of regulatory costs

within particular sectors of the economy have been similarly criticized.2

The benefits of federal regulations are generally regarded as even more

1

GAO/PEMD-95-18BR.

2

GAO/GGD-94-28.

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difficult to measure than regulatory burdens, so measures of those

benefits may also be of questionable validity.

In this review, we did not try to measure the overall burdens or benefits of

federal regulations. We focused our analysis on a limited number of

businesses so that we could better understand the issues and the variables

involved in the federal regulatory process. Specifically, we attempted to

develop information on the impact of federal regulations on selected

businesses by determining (1) which federal regulations the businesses

participating in our review and relevant federal agencies believed were

applicable to those businesses, (2) the impact (particularly cost but also

other effects) the businesses believed those regulations had on them, and

(3) the regulations those businesses considered were most problematic

and relevant federal agencies’ responses to those concerns.

Although our objectives were modest in comparison to those of many

previous studies of regulations, we experienced a number of difficulties in

conducting this review. First, most of the interest groups we

contacted—both critics and defenders of federal regulations—did not

provide the names of businesses with whom we could discuss these

issues. Some of these groups cited concerns about confidentiality or the

priority of other business as the reasons why they would not provide

nominees. Second, most of the 51 businesses that we were able to identify

and contact through other means refused to participate in our study,

frequently citing time and resource constraints. Some of these businesses

had publicly criticized federal regulations or regulatory processes. Third,

many of the 15 businesses we contacted, which had agreed to participate

in the review, did not provide information that they initially indicated that

they would be able to provide. For example, although nearly all of the

businesses said they could develop a list of applicable federal regulations,

none of the businesses provided a complete listing. None could provide

comprehensive data on the incremental costs of regulations.

Our experience and the information we were able to collect led us to

several conclusions. First, we believe that comprehensive, empirically

based data about the cost of federal regulations to individual businesses

do not readily exist and could not be developed without a great deal of

time and effort on the part of both the regulators and the regulated

community. Without such data, the cost of regulations to a business or the

economy as a whole can only be roughly estimated. Second, the agencies

also said that they are reexamining at least some of the federal regulations

and processes that businesses found most problematic. If so, the

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businesses may feel some reduction in the burden associated with those

regulations in the future. Third, we believe that communication between

businesses and federal regulators about which regulations are applicable

to particular businesses and how to comply with specific regulatory

requirements is not always effective. Finally, although the agencies

frequently said that problematic regulations were statutorily driven, some

Members of Congress believe agencies sometimes establish regulations

that go beyond the intent of Congress. This suggests that an opportunity

exists for improved communication between Congress and federal

regulators—communication that may occur through recently enacted

congressional regulatory review procedures.

Cost of Regulations Is

Difficult to Determine

As previously noted, the burden associated with federal regulations is

generally considered to be easier to measure than the benefits of

regulations. Within the burden category, direct regulatory costs are

generally regarded as easier to measure than other types of burden (e.g.,

negative effects on competitiveness or productivity). Conceptually and

logistically, it would seem to be easier to calculate regulatory costs with

regard to a single business than for an entire industry or the economy as a

whole. However, our work suggests that it is extremely difficult to develop

a comprehensive, data-based measure of direct incremental regulatory

costs, even for an individual business.

The first step in determining the cost of federal regulations to a business is

to identify all of the regulations applicable to that business. Any

comprehensive tally of a business’ regulatory costs will only be as

complete as its list of applicable regulations. Although nearly all of the

businesses we contacted said they could develop a complete list of

applicable federal regulations, none did so. As we discussed in chapter 2,

development of such a list is very difficult, requiring a sophisticated

understanding of the circumstances in which federal regulations apply as

well as a detailed understanding of a company’s business processes and

products. The businesses we contacted generally did not have prepared

lists of applicable regulations, and most found it difficult to distinguish

between federal, state, and local regulations or said they did not have the

time or resources to develop such a list. Although it may seem logical to

assume that regulatory agencies would be able to easily develop a list of

applicable regulations, in many cases the agencies would have to gather

detailed information about the companies’ business processes and

products to determine regulatory applicability.

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Another step in determining the cost of regulations to a business is to

obtain data on its expenditures that are directly traceable to federal

regulatory requirements and estimate its incremental regulatory costs.

Because most businesses would have incurred some expenses related to

regulatory goals, such as a safe workplace or the prevention of

environmental damage, even if no regulations existed, the incremental

measure is the most appropriate gauge of a company’s regulatory costs. To

identify their incremental regulatory costs, businesses must subtract

expenses they would have incurred in the absence of regulatory

requirements from their total expenditures in such areas as worker safety

or environmental protection. However, the businesses we contacted did

not collect or retain data on their incremental regulatory compliance

costs, probably because there is no business reason for them to do so. The

businesses also indicated that they could not develop incremental cost

data because they could not say what actions they would have taken or

what expenses they would have incurred in the absence of regulatory

requirements.

In summary, determining the actual cost of federal regulations to a single

company or the economy as a whole requires data—data that the

companies we visited did not have and that our work showed would be

extremely difficult for them to obtain or develop. The universe of

regulations for which cost data should be gathered was difficult for the

companies to identify and incremental cost data could at best be roughly

estimated because the businesses could not determine what expenses they

would have incurred if current federal regulations did not exist. We

believe that these problems are unlikely to be unique to the companies we

visited. Therefore, unless the breadth of companies’ regulatory

responsibilities is made clear and the incremental costs of regulations can

be accurately gauged, measures of the cost of regulations to a company or

the economy as a whole should be viewed as estimates, not precise

measures of regulatory burden. The more these estimates rely on

empirical data and sound assumptions, the greater value they hold for

decisionmakers. Public policymakers should use regulatory cost estimates

only with a clear understanding of their underlying conceptual and

methodological bases.

Agencies Said Many

Regulatory Concerns

Are Being Addressed

The agencies’ responses to the companies’ regulatory concerns also

indicated that many of the regulations or regulatory processes underlying

those concerns were being reviewed or had recently been changed. Listed

below are some agencies’ responses to companies’ concerns.

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• EPA said it had proposed allowing oil recovered from collocated and/or

commonly owned organic chemical plants to be exempt from its RCRA

hazardous waste regulations.

• Treasury officials said their agency was issuing a proposed regulation that

would dramatically reduce the reporting obligations of banks under the

Bank Secrecy Act.3

• DOL, IRS, and PBGC said that they had made a number of regulatory changes

to make it easier for businesses to establish pension plans. They also said

that new pension simplification proposals announced by the President in

June 1995 would, if enacted, simplify the rules even further.4

• EPA said it was reexamining its data needs and ways to improve its data

gathering systems for the RCRA hazardous waste management program.

The agency also said that, for certain companies, it had completed a

number of actions that significantly reduced the reporting burden

associated with the EPCRA Form R report, thereby reducing companies’

reporting requirements from nine pages to two pages.

• EPA said it has published guidelines for reducing or eliminating penalties

when violations are self-disclosed and corrected. EPA also said that its

policy is to generally provide penalty reductions for such matters as good

faith efforts to comply, ability to pay, and other factors.

The number of times that the agencies indicated that they were taking

action or had already taken action regarding areas of concern to the

companies suggests that a variety of regulatory reform initiatives are

under way within the federal government. As noted in chapter 1, every

president in recent years has attempted to reform the regulatory process,

and both the Clinton administration and Congress have recently taken a

number of reform actions. The administration’s National Performance

Review and other initiatives in this area, such as those aimed at

eliminating certain reporting requirements and reducing penalties for

self-disclosed violations of certain regulations, are part of this larger effort.

Also, Congress’ recent assumption of a role in the review of proposed

regulations also presages possible modification of regulations that

Congress concludes are uneconomic or otherwise objectionable.

We have not examined the initiatives the agencies described to determine

whether they have been implemented or whether they will actually afford

3

Treasury officials later said that Treasury (1) issued an interim regulation on April 24, 1996, that

eliminates the requirement that banks report all transactions in excess of $10,000 between banks and

certain classes of exempt persons and (2) estimated the change would reduce filings by up to 2 million

forms annually.

4

IRS officials later noted that many of these proposals were enacted in the Small Business Job

Protection Act of 1996.

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Overview and Conclusions

the businesses we talked with in this study the kind of regulatory relief

they sought. If the changes the agencies described are made, the

businesses may see a reduction in at least some of the regulatory burden

that they viewed as most problematic.

Communication

Between Businesses,

Regulatory Agencies,

and Congress Is Not

Always Effective

The information that we collected regarding applicable federal regulations

and what the businesses viewed as their most problematic regulations

strongly indicated that communication between businesses and federal

regulatory agencies has not always been adequate to meet their respective

needs. Both businesses and agencies need information to determine which

regulations are applicable to particular companies—information that both

parties said would require substantial time and resources to obtain.

However, agencies have the information that businesses need, and vice

versa; what seems to be lacking is an effective exchange of that

information. Poor communication can also lead to businesses’

misunderstanding regulatory requirements, which can in turn lead to

compliance problems or unnecessary expenditures. Finally, opportunities

appear to exist for improved communication between Congress and

federal regulatory agencies regarding the consistency of regulations with

their statutory underpinnings. Recently enacted regulatory review

procedures may provide the vehicle for that communication.

Determining Applicability

of Regulations Difficult

Without Communication

The information that we obtained from federal regulatory agencies on the

factors that determine the coverage of their regulations and on the

regulatory compliance responsibilities of two of the companies in this

review—Minco and Zaclon—clearly indicated that different businesses

can have substantially different compliance responsibilities. Most of the

agencies said that companies’ compliance responsibilities are highly

situational, dependent on such factors as the companies’ size, location,

and decisions they make in the course of conducting their business (e.g.,

whether to have an underground storage tank or to have a qualified

retirement plan). As a result, most of the regulatory agencies we contacted

said they needed a great deal of information about a business to identify

the regulations applicable to that business. Businesses also need a great

deal of information about the factors that trigger regulatory coverage to

identify their own regulatory compliance responsibilities. However, both

the agencies and the businesses told us they could not devote the time and

resources needed to develop the information they need to make those

determinations.

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Interestingly, each party in the regulatory process already has the

information the other party needs. Agencies know about their regulations

and what characteristics of companies can determine the applicability of

those regulations, but are unfamiliar with individual companies’

operations and, therefore, would need to expend substantial amounts of

time and energy learning about them to provide regulatory counsel.

Businesses know how their organizations are configured regarding

relevant regulatory determinants, but they do not always understand those

determinants and, therefore, may not know about all of their regulatory

compliance responsibilities. More effective communications could help

bridge the informational gap between businesses and federal regulatory

agencies and, as a result, could help achieve the agencies’ regulatory goals.

Poor Communication Can

Lead to a

Misunderstanding of

Regulatory Requirements

Federal agencies’ comments regarding the companies’ most problematic

regulations reinforced our conclusion regarding the adequacy of

communication between those agencies and companies about regulations.

In a number of cases, the agencies said that the companies had misstated

or misinterpreted the statute or regulatory requirement involved. In some

of those cases, the agencies said the companies were incurring

unnecessary expenses because they had misconstrued the requirements or

had taken steps that the regulations did not necessarily require. Listed

below are examples of inadequate communication between the agencies

and companies.

• Officials from Bank B said that some regulations required banks (but not

investment firms) to disclose the risks that consumers face regarding

certain investment products, and that about a quarter of the advertising

time Bank B purchased was used to publicize these risks. However, FDIC

officials said there is no regulation requiring the disclosure of investment

risks when advertising nondeposit investment products.

• Hospital officials complained about a “costly rule change” that limits

helicopter pilots to 12-hour schedules during a 24-hour period, thereby

forcing the hospital to hire two additional pilots at a cost of $100,000 per

year. However, FAA officials said that the duty time rules had not recently

changed and that no 12-hour shift limit existed.

• Officials from the paper company said OSHA lead exposure standards

require even routine maintenance workers to put on personal protective

equipment and be “fit tested,” a process the company said was extremely

expensive. However, OSHA said the regulations the company cited did not

apply to the type of routine maintenance activities the company described.

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Overview and Conclusions

• Bank B officials said that BSA requires banks to complete a report on cash

transactions of $10,000 or more while the depositor is still in the bank.

However, Treasury officials said that once the bank has verified certain

basic information about a customer, it can rely on this information in the

future and need not require the customer to remain on-site each time a

reportable transaction is conducted.

• Bank A officials complained about an FDIC requirement that all

banks—even small ones—should have a detailed contingency plan.

However, FDIC officials said the bank was referring to a policy statement

by the Federal Financial Institutions Examination Council, not a statutory

or regulatory requirement. The FDIC officials said the policy statement sets

forth areas for management to consider when developing a contingency

plan but sets no requirements.

Therefore, communication problems in the regulatory arena can result in

misunderstandings of responsibilities and, ultimately, compliance

problems and unnecessary costs.

One of the reasons that government regulators and businesses have not

always communicated effectively may be the nature of agencies’

regulatory informational mechanisms. A business’ regulatory compliance

responsibilities can originate from any of the several dozen federal

regulatory agencies, each of which separately provides information about

its own regulatory programs. Therefore, although the agencies have a

dizzying array of brochures, toll-free numbers, and other methods to

inform businesses of their regulatory requirements, a business attempting

to determine its governmentwide compliance responsibilities may have to

contact each agency to obtain this information. In some cases, multiple

agencies have responsibility for implementing a single statute, with each

agency specifying its own functions and requirements.

Regulatory compliance responsibilities may also differ within a particular

agency. For example, EPA regulatory requirements originate from several

different program units within the agency (Air and Radiation; Water; Solid

Waste and Emergency Response; and Prevention, Pesticides, and Toxic

Substances). Each of these units has its own informational mechanisms.

EPA has established an Office of the Small Business Ombudsman and

compliance assistance centers for certain industry sectors for the purpose

of consolidating information from these different program offices.

However, we did not evaluate the effectiveness of the Office or centers to

determine whether they eliminate the need for a small business or a

company within a covered industry to contact the program units directly.

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Also, these offices by definition do not cover large businesses or

companies in industries not covered by the centers.

We have not thoroughly analyzed agencies’ regulatory informational

mechanisms. However, the information that we obtained in this review

suggests that the federal government’s overall approach to the

dissemination of regulatory information is fragmented and may be

contributing to ineffective communication between regulatory agencies

and the business community. We recognize that there is a natural tension

that exists between regulators and those in the regulated community and

that no amount of information or communication will completely

eliminate disagreements and compliance problems. However, a better

understanding of which regulations are applicable to a business and the

requirements those regulations impose on the business is fundamental to

an improved relationship between these parties.

Agencies have recently taken steps to make information about their

regulations more centralized and accessible to businesses. For example,

the U.S. Business Advisor and the Asbestos Advisor programs are designed

to make it easier for businesses to determine their federal regulatory

compliance responsibilities. Other steps agencies have taken to be more

“user friendly” include (1) the previously mentioned EPA Office of the

Small Business Ombudsman and EPA’s compliance assistance centers and

(2) OSHA’s consultation program, which offers free, on-site expert

assistance to small employers in all 50 states. Congress has also attempted

to make information more available to businesses. The Small Business

Regulatory Enforcement Fairness Act requires agencies to, among other

things, publish “small entity compliance guides,” explaining the actions a

small business is required to take to comply with a rule or group of rules.

These kinds of efforts may help improve communication between federal

regulatory agencies and regulated businesses.

Communication Between

Congress and Agencies

Can Help Address

Regulatory Concerns

Although virtually all regulations have some kind of statutory basis, the

extent to which particular regulatory requirements are driven by the

underlying statutes varies. Some statutes grant agencies the authority to

issue rules within broad parameters whereas other statutes provide

agencies with little discretion regarding what should be regulated and how

the regulations should be developed and implemented. The federal

regulatory agencies responding to the businesses’ concerns about

problematic regulations frequently said that the specific requirements the

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Overview and Conclusions

businesses were concerned about were statutorily driven. Listed below are

examples of statutorily driven business concerns.

• IRS officials said that the requirements (1) to conduct a nondiscrimination

test in the administration of a 401(k) thrift savings plan and (2) to audit the

plan were required by statute rather than by IRS regulations.5

• HCFA officials said that the frequent changes in Medicare and Medicaid

billing rules were, in a number of situations, “due to enhancements or

changes made by Congress.”

• FDIC officials said that the level of detail and the number of changes in its

call reports were driven by, among other things, statutory requirements.

• EEOC officials said that its record retention requirements vary because they

are tied to the different discrimination complaint filing periods established

in each civil rights statute.

We did not review the regulations and statutes that the agencies cited to

determine whether the regulatory provisions of concern to the companies

are required by the underlying statutes. If those provisions are required by

the statutes, agencies will not be able to revise them significantly without

changes in the underlying legislation. As previously noted, several

agencies said they were recommending statutory changes to address some

of the companies’ concerns. In doing so, agencies can communicate to

Congress the degree to which their regulations are required by the

statutory language that Congress enacted.

However, some Members of Congress clearly perceive that federal

regulatory agencies have sometimes established regulatory requirements

that go beyond the intent of Congress when it passed the underlying

statutes. This perception in part led to the establishment of expedited

congressional regulatory review procedures through the Small Business

Regulatory Enforcement Fairness Act of 1996. If the regulatory provisions

that are of concern to companies are, in fact, not required by the statutes,

the agencies have a responsibility to address those concerns on their own

and not shift the responsibility to Congress. If congressional committees

of jurisdiction or individual Members of those committees believe that an

agency’s regulations do not reflect the intent of the underlying statute or

its legislative history, those committees or Members can communicate

their concerns to the agencies informally. If Congress as a whole believes

an agency’s regulation is inconsistent with the intent of the underlying

5

IRS officials later noted that the recently enacted Small Business Job Protection Act of 1996 contains

pension simplification proposals similar to those announced by the President in June 1995 that include

new design-based safe harbors methods that employers will be able to adopt in lieu of having to

conduct the nondiscrimination test.

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Overview and Conclusions

statute, Congress can amend the statute to reflect current congressional

intent and, in effect, require the agency to amend its regulation.

The expedited congressional regulatory review procedures in the Small

Business Regulatory Enforcement Fairness Act may also serve as a vehicle

for that communication—at least for new or revised regulations. If

Congress believes a new or revised regulation is inconsistent with the

intent of the underlying statute, it can pass a resolution disapproving the

rule. On the other hand, Congress can allow regulations to take effect if it

believes that a rule is in keeping with statutory intent. Although no

substitute for straightforward discussions between agencies and Congress,

the congressional review procedures in the act have the potential to lead

to a better understanding between major players in the federal rulemaking

process.

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Appendix I 

Business Interview Guide: Instructions and

Data Collection Instrument

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Appendix I 

Business Interview Guide: Instructions and

Data Collection Instrument

BUSINESS INTERVIEW GUIDE

INSTRUCTIONS FOR BUSINESSES

GAO is conducting onsite interviews with selected businesses to obtain information regarding

the impact of federal regulations. The questions GAO is asking these businesses are attached.

This interview guide provides information that affects how those questions should be

answered. The questions GAO will ask are in five main sections:

I THE AGGREGATE LIST OF REGULATIONS

II THE AGGREGATE IMPACT OF REGULATIONS

III THE MOST PROBLEMATIC REGULATIONS

IV THE GOVERNMENT’S AND BUSINESSES’ ROLE

V THE BENEFITS OF REGULATIONS

I. THE AGGREGATE LIST OF REGULATIONS

Prior to the meeting with GAO staff, businesses are requested to develop a written listing of

all (or as many as can be identified) of the federal regulations with which they must comply

as of the date of the interview. While the name of specific regulations may be difficult to

cite, this list should, at a minimum, cite the major federal statutes governing the regulations.

For example, in the area of workplace regulations, the list might include the following:

Labor Standards: Fair Labor Standards Act, Davis-Bacon Act, Service Contract Act,

Walsh-Healy Act,...

Employee Benefits: Employee Retirement Income Security Act (ERISA), Consolidated

Omnibus Budget Reconciliation Act of 1985 (COBRA), Family Medical

Leave Act,...

Civil Rights: Title VII of the Civil Rights Act of 1964, Equal Pay Act, Age

Discrimination in Employment Act, Americans With Disabilities Act,...

Health and Safety: Occupational Safety and Health Act, Mine Safety and Health Act, Drug

Free Workplace Act,...

Labor Relations: National Labor Relations Act, Railway Labor Act,...

Employment: Immigration Reform and Control Act (IRCA), Worker Adjustment and

Retraining Notification Act (WARN), Veterans’ Reemployment Rights

law,...

Other categories of regulations would likely include environmental regulations, tax

regulations, and so on. It is not necessary to cite the specific section of the U.S. Code or of

the Code of Federal Regulations. However, if specific citations are known, please include

them.

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Business Interview Guide: Instructions and

Data Collection Instrument

Regulations to Include/Exclude

Please do not include any regulations that have been proposed but have not been published as

a final rule. However, any regulations that have been made final but have not yet taken

effect should be included. For example, if an agency published a final rule on July 1, 1994,

but the rule does not take effect until July 1, 1995, you should still list the rule in your

aggregate listing.

Questions regarding state and local regulations are included in this section to obtain a context

within which federal regulations operate. In some cases, state or local regulations may be

mandated by federal regulations or statutes, and therefore may be difficult to distinguish from

federal regulations. Include as federal, any state or local requirements you believe are

mandated by federal law or regulation.

II. THE AGGREGATE IMPACT OF REGULATIONS

In this section, businesses are requested to provide information on the aggregate impact on

their businesses of all federal regulations. "Aggregate impact" can take a variety of forms

and can be measured in a variety of ways. One obvious and commonly used measure of

impact is the incremental dollar cost of regulatory compliance. In fact, the bulk of this

section is devoted to capturing businesses’ incremental compliance cost (see below).

However, we are also interested in other effects of federal regulations on businesses.

Examples of non-cost aggregate effects could include difficulties in starting a new business,

difficulties in expanding an existing business, loss of competitive advantage, delays, and so

on. Please note any cost or non-cost effects of regulations in your answer to question 1 in

this section.

Incremental Cost of Regulations

We would specifically like to obtain data on businesses’ incremental costs associated with

federal regulatory compliance during 1994. We define incremental cost as any costs

businesses incur that would not have been incurred were it not for federal regulatory

requirements. Any costs that would have been incurred in the normal course of business

should not be included. For example, if a business would have taken certain actions to

control pollution regardless of federal environmental requirements, the cost of those actions

should not be included as an incremental cost.

We would like to collect those incremental costs in total and for each of three cost

classifications: (1) capital costs, (2) labor costs, and (3) other costs. These categories are

defined as follows:

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Business Interview Guide: Instructions and

Data Collection Instrument

1. Capital Costs: Actual expenditures, rather than the depreciation, for any

property, plant, or equipment required to bring the company into compliance

with a federal regulation.

2. Labor Costs: Actual expenditures (pay and benefits) for salaried or hourly

employees incurred as a consequence of federal regulations. These

expenditures could include labor costs associated with conducting required

inspections, completing required paperwork, conducting required training

courses, or meeting with government personnel regarding federal regulatory

issues.

3. Other Costs: Any other costs associated with complying with federal

regulations. These could be costs for performing activities necessary to comply

with regulations that affected how a manufacturing or operating function is

carried out, costs (material and overhead) for modifying a product to meet a

regulatory requirement, or research and development costs to determine product

or process modifications to meet regulatory standards.

If this categorization scheme is not workable for you as a way to break down your

incremental compliance costs, you may use some other system.

Costs should have a reasonable and verifiable basis for measurement. We would also like to

collect (or at least review) any documentation of these costs. Businesses should use their

accounting and financial records as their primary source of cost data.

Cost items that should not be included

Certain items should not be included in these cost tabulations. As noted above, we are

interested in the incremental cost of regulations on businesses-- costs that businesses would

not have borne were it not for federal regulations. Therefore, do not include any costs that

you would have incurred even if the federal regulations were not there.

Other items that should not be included in the tabulations include:

o Payments to the federal government. Do not include payments for income and excise

taxes, foreign trade tariffs and import duties. Also, do not include fines resulting from

noncompliance with regulations.

o Costs of overcompliance. Exclude any costs incurred to meet a more stringent

criterion than that required by a federal regulation. Such costs may include actions

based on competitive factors, professional standards, employee welfare or the need to

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comply with a state or local regulation that was more stringent than a federal

regulation.

o Costs not directly attributable to compliance actions. To be directly attributable, a cost

element must be essential to accomplish compliance action. For example, if a

business is required to widen a bathroom door to accommodate employees with

disabilities and the cost of the modification is $1,000, any expenditures over that

amount (e.g., spending $2,000 to enhance the appearance of the doorway) should not

be considered part of the business’ incremental costs.

o Costs of secondary effects. "Secondary effects" include such costs as loss of

productivity, investment disincentive, international competitiveness, lost opportunity,

construction delays, inflation, resource misallocation and shortage of supplies.

Although secondary effects of regulation are real and, in many instances, cause

substantial costs, their measurement is much more difficult than incremental costs and

will be captured by obtaining businesses’ views and cost estimates separate from

incremental cost data.

o Costs associated with nonfederal regulations. Nonfederal regulations are those

initiated by state or local governments or driven by professional standards. Any costs

associated with these nonfederal requirements should not be included.

o Lobbying costs. Do not include any costs associated with actions trying to influence

legislative or executive branch personnel to change existing or proposed rules.

Time period

Cost data should be accumulated for only 1994. While calendar year 1994 is our primary

focus, businesses may use the latest fiscal year for which data are available and readily

retrievable.

Certain cost information for other periods may be reflected separately from the total when

necessary and appropriate to accurately reflect regulatory compliance costs.

Regulations covered

Cost data should reflect costs associated with the regulations that were identified in the

"aggregate list of regulations" in section I above. Therefore, compliance costs should be for

any regulations that have been made final, even those that have not yet taken effect. For

example, if a rule is published in final on July 1, 1994, and becomes effective January 1,

1995, any costs a business incurs between July 1 and January 1 (e.g., capital expenditures,

training, hiring additional staff) in order to meet the compliance standards should be included.

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The incremental compliance cost data should not reflect costs associated with any regulations

that have been proposed but have not been published as a final rule. For example, if a

regulation has been published as a proposed rule and the agency is accepting comments

before final publication, do not include any costs incurred before the rule has become final.

Businesses may, however, include costs associated with general information gathering

regarding proposed rules (e.g., subscriptions to the Federal Register or other information

sources).

Net costs

Businesses should deduct from the incremental costs any cost reductions that result from

complying with a regulation. Such reductions include any income from sales of a by-product

that resulted from a manufacturing process or an operation required in order to comply with a

regulation. However, cost reductions do not include benefits obtained from the existance of

regulations such as (1) income a business realizes from making a product so that its

customers can comply with regulations, (2) investment tax credits, or (3) other income tax

benefits. For example, a company would deduct from the incremental costs of complying

with the Clean Water Act, sales of materials recovered by equipment installed to meet

discharge requirements. A company would would not deduct sales of new product it

developed to meet a compliance need of a customer.

III. THE MOST PROBLEMATIC REGULATIONS

We define the term "problematic regulations" broadly to include any federal programs,

regulations or laws that the business views as causing it the greatest problems or difficulties

in general. Please try to focus on the top three to five federal regulations that the business

considers most problematic. The most problematic regulations faced by the business may be

in one or more areas (e.g., paperwork, recordkeeping, resource management, investment,

contracting, compliance, etc.) and may be viewed as problematic for a variety of reasons such

as being too costly, too intrusive, too vague, unnecessary, duplicative, ineffective, inefficient,

or overly burdensome. Problematic regulations would include those regulations the business

would most like to see changed or eliminated.

Please note, however, that asking about problematic regulations is not necessarily the same as

asking what regulations are the most costly, since a costly regulation may not be considered

problematic if it is also viewed as being very beneficial (i.e., worth the cost, or is already a

part of business operations). If cost is a reason for the regulation being considered

problematic, please provide the incremental costs associated with its compliance, to the extent

possible, using the incremental cost principles described above.

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IV. THE GOVERNMENT’S AND BUSINESSES’ ROLES

These questions seek views on actions that the government or businesses could take, or have

taken, which would reduce the "problematic" nature of certain regulations or that can improve

the functioning of regulatory programs as a whole. Please specify, if possible, whether the

source of the requirement, process or procedure being addressed is in federal statute or law,

or whether it is contained in a federal regulation or a regulatory agency’s policy. It may be

useful to consider your experience or knowledge of federal rulemaking processes or

enforcement or audit procedures. Also, please be as specific as possible about what actions

should be taken, how and by whom (e.g. the President, Congress, Office of Management and

Budget (OMB), Environmental Protection Agency (EPA), etc.) to implement your

suggestions.

Please suggest practical solutions, improvements or actions you believe could or have worked

for your business. If you are aware of things other businesses or organizations have done or

are doing to improve regulations, regulatory compliance processes or rulemaking processes,

please provide a brief description of the activity and names and phone numbers of appropriate

business or organization representatives GAO could contact for more information.

Businesses are requested to provide appropriate documentation for answers to all questions

concerning costs or for any question for which it is reasonable to expect that a business

should have some data to support its views. If time permits, GAO’s evaluators may request

on-site inspection of business operations, records, or workplace activity to verify and better

understand answers to key cost estimates or other questions.

V. THE BENEFITS OF FEDERAL REGULATIONS

Businesses should note any tangible or intangible benefits and provide applicable

documentation if possible. Beneficiaries of federal regulation could include the company, its

employees, its customers, the community, the environment, special interest groups, etc.

Businesses should also consider as benefits such things as cost reductions that result from

complying with a regulation (see incremental cost principle No. 8 above). Such reductions

would include the net income derived from sales of a by-product of a manufacturing process

or an operation required in order to comply with a regulation. Other benefits could include

those obtained from the existence of regulations, such as revenues from new products created

by the necessity for customers to comply with regulations, investment tax credits or other

income tax benefits and federal industrial support programs (e,g., federal research and

development or credit programs).

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BUSINESS INTERVIEW QUESTIONS

I. THE AGGREGATE LIST OF REGULATIONS

NOTE: Before answering these questions, please compile a list of all of the federal

regulations with which you must comply. (See instructions.)

1. Does your aggregate list of regulations cover all the federal regulations with which your

business must comply? If not:

a) What percent of all the federal regulations would you estimate are covered by this

list?

b) In general, what types of regulatory requirements are not included?

2. How did you identify the regulations listed?

3. Of all the regulations with which you must comply--federal, state, and local--, please

estimate the percentage of the total number of regulations represented by each level of

government. What percent of all regulations originated with the federal government? What

percent originated at the state government level? What percent originated with local

governments?

4. Of all the regulations with which you must comply--federal, state, and local--, please

estimate the percentage of the total aggregate effect or impact of all regulations represented

by each level of government. What percent of the aggregate effect originated with the federal

government? What percent originated at the state government level? What percent originated

with local governments?

5. Of all the regulations with which you must comply--federal, state, and local--, please

estimate the percentage of the total cost of all regulations represented by each level of

government. What percent of the total cost originated with the federal government? What

percent originated at the state government level? What percent originated with local

governments?

6. Which level of government’s regulations--federal, state, or local--are the most problematic?

Why? Which level’s regulations are least problematic? Why?

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II. THE AGGREGATE IMPACT OF REGULATIONS

1. There are a number of ways the aggregate effects of regulations could be described. How

would you describe the aggregate effects of all the regulations with which your business must

comply?

2. Certainly one way to describe the aggregate effect of regulations on a business is cost.

What were your business’ aggregate incremental costs of complying with federal regulations

during 1994 in total and for each of the following cost classifications. Please describe what

cost elements are included in each cost classification, how the estimates were developed, and

provide appropriate documentation. (See instructions on incremental costs.)

Cost Classification Costs ($) % of Total for Class

Capital Costs

Labor Costs

Other Costs

Total Costs

3. Which federal regulations account for most of these incremental regulatory costs?

4. In addition to these incremental regulatory costs, are there other costs your business has

incurred in complying with federal regulations (e.g., reduced ability to adopt innovative

business practices, construction delays, loss of productivity, loss of competitive advantage,

difficulties in expanding your business)? If so, please describe and provide any data.

III. THE MOST PROBLEMATIC REGULATIONS

1. Which federal regulations do you regard as the most problematic for your business? Why

do you consider them problematic (e.g., cost, complexity, vagueness, mode of enforcement)?

2. For each of those problematic regulations listed because of their cost, please provide your

incremental costs in total and for each of the following cost classifications. Please describe

what cost elements are included in each cost classification, how the estimates were developed,

and provide appropriate documentation. (See instructions on incremental costs.)

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Cost Classification Costs ($)

Capital Costs

Labor Costs

Other Costs

Total Costs

3. What proportion of your business’ total incremental regulatory compliance costs reported

above would you estimate are attributable to these problematic federal regulations?

IV. THE GOVERNMENT’S AND BUSINESSES’ ROLE

1. For the regulations you consider problematic, what specific changes would you recommend

the government make to correct or mitigate these problems?

2. In addition to the changes with regard to problematic regulations, are there other specific

changes you would make:

a) to any federal laws, regulations, or policies, and/or

b) to the processes used to promulgate, implement, and enforce these laws, regulations

or policies.

3. In general, what can government (i.e., Congress, OMB, federal agencies) do to improve the

federal regulatory process?

4. Is there anything that your business has done to try and help it manage the regulatory

requirements it faces or correct/mitigate regulatory problems? If so, please describe. Did

those actions help?

5. Do you know of anything that other businesses have done to try and help manage or

correct regulatory problems? If so, please describe. Did those actions help?

6. What characteristics do you believe distinguish successful compliance strategies in a

business like yours (e.g., management commitment, resources, trained personnel, etc.)?

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7. Have there been any efforts by your trade association or other similar organizations to try

and help your business or similar businesses to manage their regulatory requirements or

correct/mitigate regulatory problems? If so, describe. Did those actions help?

V. BENEFITS OF FEDERAL REGULATIONS

1. What benefits, if any, does your business, its employees, the community or others derive

from federal regulations?

2. Did your business derive any net income from sales of a by-product of a manufacturing

process or an operation required in order to comply with a regulation (and deducted from the

incremental cost estimates above)? If so, how much income was derived in 1994?

3. What federal income tax, investment tax or industrial support benefits did your business

receive in 1994?

4. Are there any other benefits your business derived from the existence of federal

regulations?

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Companies’ Concerns About Regulatory

Issues and Agencies’ Responses

We asked each of the 15 companies participating in our review to identify

which federal regulations they regarded as most problematic. The

companies provided us with more than 100 examples of regulatory

concerns. We grouped those concerns into the following 10 broad themes:

(1) Compliance with a regulation was costly and/or those costs

outweighed the benefits provided by the regulation.

(2) The compliance costs associated with a regulation affected the

companies’ competitiveness.

(3) The regulation at issue was unreasonable (e.g., it was not scientifically

based).

(4) The requirements associated with a regulation were difficult to

understand, either because of the technical language involved or because

the requirements keep changing.

(5) Certain regulatory requirements were unnecessarily rigid or inflexible.

(6) The paperwork or process requirements associated with a regulation

were excessive and costly.

(7) The penalties imposed on companies for noncompliance were too

severe.

(8) Regulators were overly deficiency-oriented or had a “gotcha”

enforcement approach.

(9) Regulators lacked knowledge of industries and provided little

assistance to businesses trying to comply with the regulations.

(10)Regulations from different agencies or levels of government were

poorly coordinated or duplicative.

We asked the agencies responsible for the regulations mentioned in the

companies’ concerns to respond to each one. The agencies’ responses to

the concerns varied greatly.

This appendix highlights many of the examples from the companies and

agencies.

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Costly Compliance

and Cost-Benefit

Issues

This section includes examples of (1) companies’ concerns about

regulatory compliance being too costly and costs not always justifying the

benefits and (2) agencies’ responses to these concerns.

Company Example 1 Officials from a petrochemical company said that the benzene emissions

standards under the National Emissions Standards for Hazardous Air

Pollutants (NESHAP) impose substantial costs on businesses. However,

these officials said that the relatively small benefits the standards produce

are outweighed by unintended consequences. The officials said the

Environmental Protection Agency (EPA) estimated that employers’

compliance costs would be $200 to $300 million, but they said petroleum

refiners alone have spent $2 billion during the compliance period from

August 1991 through December 1994. They said the petrochemical

company incurred significant capital expenditures to enclose refinery

sewer and treatment systems, and the standard requires a tremendous

amount of ongoing maintenance, inspection, and recordkeeping.

Regarding benefits, the officials said that a conservative EPA risk model

showed in 1989 that less than one case of leukemia would be prevented

annually due to controls on refineries and chemical plants. However, they

said that the danger of enclosing flammable mixtures of hydrocarbon

gases has been shown to pose a greater risk than the calculated reduction

in cancer risk. The petrochemical officials said EPA’s revised model

reportedly shows no justification for the rule to exist.

Agency Response 1 First, EPA officials said they disagreed with the petrochemical company’s

portrayal of the costs and benefits associated with this regulation.

According to the officials, EPA’s Regulatory Impact Analysis for the

benzene waste air regulation estimated the nationwide capital cost for the

rule to be $250 million, with total annual compliance costs estimated at

$87 million. The officials said the petroleum refiners’ compliance cost

estimate of $2 billion was made before EPA’s amendment of the benzene

waste rule in 1993, and so is not relevant to the rule currently in force.

Furthermore, they said the industry estimate of $2 billion greatly

overstated costs attributable to the prior rule because (1) it was based on

an extrapolation from a few facilities and (2) it improperly assumed the

need to control many units that were already in compliance.

EPA officials said many companies incurred higher costs than the agency

estimated because some companies coordinated compliance with this rule

with requirements under two other environmental laws—the Resource

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Conservation and Recovery Act (RCRA) and the Clean Water Act (CWA). The

officials said the cost of these coordinated actions substantially exceeded

the cost attributable to the benzene waste rule alone.

Second, EPA officials said the 1989 EPA risk estimate referred to in this

example was based on the limited data that were available during

development of the benzene waste regulation. They said subsequent

sampling by industry found much more benzene in waste emissions than

EPA had estimated in 1989, substantially increasing risk reduction under

the rule. Moreover, EPA officials said controlling benzene emissions

provides additional benefits. For example, they said controlling benzene

emissions significantly reduces emissions of at least nine other hazardous

air pollutants, as well as volatile organic compounds that are a key

component of ground-level ozone. EPA officials said ground-level ozone,

commonly known as smog, causes respiratory and other problems in

people living in many American cities. They said that since many facilities

use multimedia compliance approaches, additional benefits will also

accrue from reducing pollutant emissions to other media.

Third, with regard to the explosion hazard issue, EPA officials disagreed

with the company’s comments that the benzene waste rule increases risk.

The officials said the rule would have the opposite effect. For example,

they said before the rule was implemented many systems were open to the

atmosphere, a condition that renders flammable the mixtures of

hydrocarbon gases in the vicinity. The officials also said the rule now

requires companies to enclose waste management operations so that air, a

key component of flammable mixtures, is kept out of the system, thereby

reducing the danger.

Finally, EPA officials disagreed that there is no justification for the rule.

They said that although industry modeling with EPA’s revised Human

Exposure Model and the 1989 data show the risk of benzene exposure to

be less than EPA estimates, it is not sufficiently different to affect a

decision about whether the rule is justified. They said this is particularly

so in light of the more recent data (previously discussed) from industry

sampling showing higher benzene content in waste.

Company Example 2 Representatives of the fish farm said that the Internal Revenue Service’s

(IRS) rules on how to account for the capital costs of company

construction projects done by the firm’s employees are complex and

costly. They said before a 1986 change in the tax code, indirect costs (e.g.,

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telephone costs associated with the construction project) could be treated

as a business expense and, therefore, could be deducted from that year’s

taxes. They also said that after 1986, indirect costs were required to be

included as a capital expense, and could only be deducted over a long

period of time. The fish farm representatives said identification of indirect

expenses associated with such construction projects is time consuming

and expensive. In the end, they said, the company had to pay higher taxes

because their deductions decreased and taxable income increased.

Agency Response 2 IRS officials agreed that capitalizing indirect costs under section 263A of

the Uniform Capitalization Rules is time consuming and expensive.

However, they said that Congress imposed this requirement in the Tax

Reform Act of 1986. The officials said section 263A of the act (1) provides

a series of rules for manufacturers, construction contractors, and

taxpayers who produce property for their own use and (2) minimizes

differences in tax treatment of costs for purchased and self-constructed

assets. They said Congress clearly intended that the effect of this

requirement would be a decrease in the taxpayer’s current deductions and

a corresponding increase in taxable income.

IRS officials said the Service has taken steps to minimize the burden of

complying with these rules. For example, they said some taxpayers may

use a simplified method to determine the additional costs under section

263A that must be allocated to certain self-constructed assets used in the

taxpayer’s business and not held for sale to customers. IRS officials said

the fish farm representatives should carefully assess the applicability of

this regulation to the company.

Company Example 3 The paper company’s officials said that compliance with the Occupational

Safety and Health Administration’s (OSHA) guarding1

 provisions for their

machinery is very expensive, and that retrofitting their existing machines

will cost between $250,000 and $300,000 per machine. The officials also

said that the time and attention spent on guards is far out-of-proportion to

the benefits gained. For example, they said their injury logs indicate that

fewer than 1 percent of all injuries involve the lack of guards. The officials

also said that instead of spending money on guards for the existing

process, which does virtually nothing to improve employee safety, it

would be better to invest in developing ways to keep people out of the

paper-threading process entirely.

1

Machine guards are devices put on machines to prevent injury to the machine operators.

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Agency Response 3 OSHA officials said it is unclear why this company would need to retrofit

existing equipment to meet safety and health standards that have been in

effect for more than 20 years. They said the pulp and paper industry

standards (29 C.F.R. 1910.261) were originally established by the pulp and

paper industry in 1969; they became OSHA rules in 1971. Therefore, they

said that only companies that have been out of compliance with the

standard for years would need to retrofit their equipment at this point.

OSHA officials disagree with the company’s assertions that the cost of the

machine guards is out of proportion to the benefits. They said machine

guards have been consistently proven to provide essential safety

protections to workers and substantially reduce the risk of serious

injuries. While they acknowledged the company’s suggestion that

removing workers entirely from the paper-threading process may reduce

the likelihood of injuries, the officials pointed out that the proposal would

not protect workers who perform maintenance and servicing duties from

being injured by unguarded machinery.

OSHA officials said they recognize the need to update the pulp and paper

industry’s standards to address new technology and ensure consistency

with more recent OSHA standards. However, until the standards are

updated, the officials said employers in the paper industry have the option

to comply with certain provisions of the machine-guarding standards (29

C.F.R. 1910, Subpart O) and lockout/tagout standards (29 C.F.R.

1910.147) in lieu of the outdated provisions addressing similar hazards in

29 C.F.R. 1910.261. They also said that OSHA’s variance process allows

firms to develop and implement alternative methods of protecting

employees if they can show that the alternative provides as much

protection as required by the standards.

Company Example 4 The hospital’s officials said the Federal Aviation Administration (FAA)

instituted a costly rule change involving the shift lengths of helicopter

pilots. After several helicopter crashes raised safety concerns, the hospital

said FAA limited pilots’ shift length to 12 hours during a 24-hour period.

They said that prior to this rule change, pilots had been able to work

24-hour shifts as long as they had a minimum of 8 hours of rest during the

24-hour shift. The officials said that, as a result of this rule change, the

hospital had to hire two additional pilots at a cost of $100,000 per year.

The officials questioned the net safety gains of this policy change and the

basis, if any, for the policy change.

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Agency Response 4 According to FAA officials, the duty-time rules for hospital emergency

medical evacuation service pilots as described in the regulation have not

changed, and the hospital is not required to limit pilots to 12-hour shifts.

The officials said an evacuation service pilot must receive at least 8 hours

of rest during any consecutive 24-hour period, and the assignment may not

exceed 72 consecutive hours at a hospital. They said on completion of a

hospital emergency medical evacuation service assignment, the pilot must

be given a rest period of at least 12 consecutive hours for an assignment of

less than 48 hours and at least 16 hours for an assignment of more than 48

hours.

Companies’ Concerns

About the Effect of

Compliance Costs on

Competitiveness

This section includes examples of the companies’ concerns about the

effect of regulatory compliance on (1) companies’ competitiveness and

(2) companies’ decisions about their future expansion efforts. The

agencies’ responses to each concern follow immediately after the concern.

Company Example 5 Officials from a packaging manufacturer said that the Clean Air Act’s

regulations are the most problematic for the company, with incremental

costs of over $100,000 incurred in 1994. The officials said that these costs

have caused the company to shift resources away from revenue-producing

activities and toward regulatory compliance functions that have little or no

productive value and constrain company growth.

Agency Response 5 According to EPA officials, packaging manufacturers can be major emitters

of volatile organic compounds, a principal component of ground-level

ozone and the cause of a variety of health problems. The officials said if

the packaging manufacturer was located in an area that was not meeting

the national air quality standards for ground-level ozone, it would be

subject to limitations on its emissions of volatile organic compounds. They

also said the company would have options for limiting these emissions

(e.g., it could add a control device to its process or use less-polluting raw

materials in its process). The officials said EPA could not comment on the

costs incurred by this particular company without more information.

However, EPA officials disagreed with the company’s comments about

control measures being unproductive, particularly since reduced

emissions improve air quality and protect the health of many people. The

officials said that although the cost of these measures may not generate

revenue, many firms have found that process improvements to prevent

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pollution can yield efficiencies that reduce the cost of clean air

compliance.

Company Example 6 Bank B officials said some bank regulations give nonbanks (e.g.,

investment brokerage firms) an unfair competitive edge in the

marketplace. For example, the officials said that one regulation requires

banks to disclose the risks faced by consumers with certain investment

products, but investment firms are not required to make similar

disclosures. The bank officials said about a quarter of the airtime they

recently bought for advertising their investment products had to be used

to publicize regulatory issues, such as rates and term disclosures. They

said a nonbank could have spent the same advertising time simply selling

their products and services.

Agency Response 6 Officials from the Federal Reserve Board (FRB), Federal Deposit Insurance

Corporation (FDIC), and Office of the Comptroller of the Currency (OCC)

responded to Bank B’s concern. Both FRB and FDIC officials said there is no

regulation requiring the disclosure of investment risk. They said this

provision is included in an interagency policy statement on retail sales of

nondeposit investment products that was adopted jointly by the three

regulators and the Office of Thrift Supervision. They also said the policy

statement notes that customers should be informed that nondeposit

investment products are not insured by FDIC; are not deposits or other

obligations of the institution and, therefore, are not guaranteed by the

institution; and are subject to investment risks, including possible loss of

principal.

FRB officials said this policy is intended to ensure that potential customers

are aware that not all products they purchase in a bank are insured or

obligations of the depository institution. For example, they said

investment products, such as mutual funds, are not insured and are not

obligations of the depository institution. They said these disclosures

should be included during a bank’s sales presentations, when an

investment account is opened, and in any advertising and promotional

materials. FRB officials said brokers/dealers are not required to make

similar disclosures because their customers are unlikely to confuse

products sold by those broker/dealers with insured deposits.

According to FDIC officials, they agree with Bank B that FDIC member

institutions have a substantial competitive advantage over financial firms

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whose products do not have a federal guarantee. However, they said that

this competitive advantage is mitigated somewhat by certain

responsibilities borne by FDIC-insured depository institutions and not by

nonbanks or nonmember banks. For example, FDIC officials said only FDIC

member banks must comply with FDIC regulations, advertise their insured

status, and keep customers informed about which of their products are

insured by FDIC.

According to OCC officials, since banks and nonbanks operate under

different statutes, there is competitive inequality between them. The

officials said they support statutory changes that would level the playing

field among financial service providers. To address other inequalities

between banks and nonbanks, they said OCC is evaluating how nonbanks

are regulated. Also, the officials said OCC is working with the Securities

and Exchange Commission (SEC) to obtain more consistent regulation

among all providers of financial services. For example, they said OCC is

working with SEC to set appropriate disclosure standards for banks and

nonbanks offering mutual funds to the public.

Companies’ Concerns

About Unreasonable

Regulations

This section includes examples of companies’ concerns about regulations

they viewed as unreasonable (e.g., a regulation or a process was not

scientifically based or the regulators did not understand the industry they

regulated) and the agencies’ responses to these concerns.

Company Example 7 A Bank A official said the Equal Employment Opportunity Commission

(EEOC) record retention standard is inconsistent with how EEOC pursues

cases. He said EEOC requires that former employees’ personnel files be

retained for only 1 year after leaving a company, but on several occasions,

EEOC staff have questioned bank officials about employees who left several

years ago. The official said that, if the bank had followed the EEOC

guidelines and only kept employees’ files for 1 year, it would have had a

“major problem.” He said EEOC is likely to rule in a former employee’s

favor by default if the employer does not have the documentation to

support its position.

Agency Response 7 According to EEOC officials, the specific requirements for maintaining

personnel records are tied to the filing periods of each statute. The

officials said title VII of the Americans with Disabilities Act’s (ADA)

regulations require personnel records to generally be kept for 1 year, as

correctly stated by the Bank A official, since charges can be filed up to 300

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days after the alleged discrimination. Equal Pay Act lawsuits must be filed

within either 2 or 3 years of the alleged discrimination; the act’s

recordkeeping requirements contain 2- and 3-year record retention

periods.2

 Also, the Age Discrimination in Employment Act (ADEA) has 1-

and 3-year retention requirements. EEOC officials said their record

retention standards establish a floor. They said employers, if they believe

it is good business practice, may keep the records for longer periods.

When there is a pending discrimination charge, EEOC officials said all of the

statutes require employers to preserve all relevant personnel records until

final disposition of a charge. They said if the bank has complied with these

requirements and there is no pending charge of discrimination, destruction

of records during the normal course of business would not violate the law

or give rise to an adverse inference.

Company Example 8 Officials from the petrochemical company said EPA recently finalized rules

that unnecessarily restrict how refineries manage oil recovered from their

refining operations. They said these rules treat oil returned to the refinery

from associated chemical plants as waste that cannot be reused.

According to company officials, before the rules, companies used

recovered oil as a raw material input into the refining process and

produced products from the oil. Company officials believe refineries

should be free to use recovered oil to produce petroleum products without

interference from EPA.

Agency Response 8 According to EPA officials, as of July 1994, the recovered-oil rule excludes

from RCRA hazardous waste regulations any recovered oil that is generated

by normal petroleum refining operations and reinserted into the refining

process. They said this exclusion does not apply where recovered oil was

generated from organic chemical industry operations, except where

petrochemical and petroleum refining operations share a common

wastewater treatment system. (This stipulation is based on the concern

that additional toxic constituents (e.g., chlorinated compounds) may be

present in petrochemical processing residuals that are not found in

residual hydrocarbons from petroleum refining.) However, EPA officials

said in the Petroleum Refining Hazardous Waste Listing Determination,

signed in October 1995, it proposed an approach to expand the recovered

oil exclusion for petroleum refining operations to include recovered oil

from collocated and/or commonly owned organic chemical plants.

2

29 C.F.R. 1620.32.

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Company Example 9 Bank B officials considered the reporting requirements under the Bank

Secrecy Act (BSA) time consuming, of negligible value to law enforcement,

and of no value to banks. Under BSA, the officials said banks are required

to report financial activity by individuals who daily deposit $10,000 or

more in cash. In many cases, they said, the reports track legitimate

transactions involving businesses that handle large amounts of cash on a

daily basis (e.g., gas stations) rather than identifying any potential criminal

activity. The officials said that the reports are time consuming to prepare

and require about 60 lines of information. They said that for single cash

transactions of $10,000 or more, BSA requires the bank to complete the

report while the depositor is still in the bank. Furthermore, the officials

said BSA requires that the bank review its total deposits for the day and

report individuals with multiple transactions totaling $10,000 or more.

They said the latter situation requires the bank to review transactions from

all of its branches and follow up with the customer to complete the report.

While the intent of BSA was to identify criminal activity, bank officials said

they have seen little evidence of the federal government’s or law

enforcement agencies’ using the information the bank provided on these

forms. They said few prosecutions have occurred as a result of the bank’s

reporting these transactions. Bank officials said the reporting requirement

should be changed, requiring banks to report only suspicious activity

rather than all daily $10,000 cash transactions.

Agency Response 9 Department of the Treasury officials said they disagreed with some

aspects of Bank B’s comments about BSA. First, the officials said once a

financial institution has verified certain basic identification information

about a customer, the institution can rely on this information in the future

rather than requiring the customer to remain on-site each time a

reportable transaction is conducted. Also, they said most banks use

computer programs that link the responsibility of completion of the

Currency Transaction Report with other functions of the bank’s automated

information systems. Second, the officials said BSA regulations do not

require banks to aggregate multiple transactions under $10,000. They said

multiple transactions must be reported only if the bank has knowledge

that a customer’s aggregate currency transactions exceed $10,000 in a day.

Treasury officials also disagreed with Bank B officials’ assertions that BSA

reporting requirements are of negligible value to law enforcement. They

said that Treasury believes that recent efforts to streamline the regulatory

reporting process more than adequately address previous industry

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concerns of complexity and burdensome reporting. In addition, Treasury

officials said Bank B’s fear that BSA data are insufficiently used is

unfounded. Currently, the data financial institutions report are reviewed

by Artificial Intelligence Systems at Treasury and IRS. The officials said

there are over 90 million records of financial information in its financial

database and, in 1994 alone, the database was queried over 1.9 million

times by federal, state, and local law enforcement agencies. The officials

also said the information reported to Treasury under BSA creates an

invaluable paper trail for investigators to follow as they track criminals

and their assets. In addition, they said the information is used as a critical

tool in criminal, tax, and regulatory proceedings for building investigative

leads, identifying individuals and organizations involved in illicit financial

activity, and disclosing unreported income.

Treasury officials agreed in part with Bank B’s comments that the most

effective way to combat financial crime is to reduce routine regulatory

burdens and jointly develop programs with the financial community to

look at all facets of financial activity vulnerable to money laundering. The

officials said Treasury issued an interim regulation on April 24, 1996, that

dramatically reduces the reporting obligations of banks. For example, they

said provisions of the interim regulation eliminate some of the routine

currency reporting that Bank B mentioned.3

 In addition, the officials said

Treasury will issue new guidance to financial institutions about which

types of activity to report, when the activity should be reported, and to

whom to make the report.

Company Example 10 An official of a tank car company said the Department of Transportation’s

(DOT) requirement that all of the company’s employees receive hazardous

materials training is unreasonable because only 1 percent of their

employees actually deals with hazardous materials. He also said the

training is required every 2 years and costs the company approximately

$40,000—an expense he said the company would not incur were it not for

the requirement. The official said new employees must also receive the

training, which costs the company an additional $10,000. He also

questioned the value of the training because it is primarily about how to

complete shipping papers to meet DOT requirements.

3

Treasury officials said that the interim regulation eliminates the requirement that banks report all

transactions in excess of $10,000 between banks and certain classes of exempt persons. They

estimated the change would reduce filings by up to 2 million forms annually.

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Agency Response 10 According to DOT officials, the allegation that “hazmat training is primarily

about how to complete shipping papers to meet DOT requirements” is

incorrect. The officials said hazmat employee training must include the

following three categories: (1) general awareness/familiarization training

to raise a hazmat employee’s awareness of hazardous materials

regulations and awareness of the purpose and meaning of hazard

communication requirements, (2) safety training to provide information

concerning the hazards presented by hazardous materials and procedures

to protect the trainee and the public, and (3) function-specific training to

provide job-specific training suitable for the function performed by the

hazmat employee. For example, DOT officials said a hazmat employee who

fills, marks, and labels packages of hazardous materials for transportation

must receive specific training in that function, but the employee need not

be trained in the preparation of shipping papers if he or she does not

perform that function.

Concerns About

Companies Not

Understanding

Regulatory

Requirements

This section includes examples of companies’ concerns about the

difficulties associated with understanding regulatory requirements (e.g.,

the language is very technical or the requirements keep changing) and

agencies’ responses to the concerns.

Company Example 11 According to the hospital’s officials, it is very difficult to keep pace with

frequently changing Medicare and Medicaid billing rules. Although the

hospital’s computer programmers have spent many hours (approximately

1,500 during fiscal year 1994) trying to keep their automated patient billing

system up to date, the hospital officials said it is like “chasing a moving

target.” They said approximately 40 percent of the hospital’s billings are

Medicare- or Medicaid-related.

Agency Response 11 Officials from the Department of Health and Human Service’s Health Care

Financing Administration (HCFA) said a number of changes to hospital

billing procedures are due to enhancements or changes made by Congress.

The officials said HCFA is aware of the burden that frequent changes have

on hospitals and is working on efforts to minimize the burden. For

example, they said HCFA tries to give hospitals 90 days to make system

changes to accommodate Medicare legislative changes. However, HCFA

officials also said that legislative mandates do not always provide the

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amount of lead time HCFA would normally afford providers to make

changes.

Company Example 12 Roadway Services, Inc., officials said that many labor and employment

regulations overlap or have conflicting elements. They also said that the

regulations are often either very vague or very detailed, not generally

comprehensible. The officials said the regulations implementing Executive

Order 112464

 are a classic example of unclear federal requirements that

frustrate many companies.

Agency Response 12 According to officials of the Department of Labor’s (DOL) Employment

Standards Administration (ESA), Roadway’s officials expressed the

company’s general discontent with DOL’s regulations and only specifically

cited Executive Order 11246 (Affirmative Action) as problematic. The

officials said the regional and district offices of DOL/Office of Federal

Contract Compliance Programs (OFCCP) (1) regularly give seminars

explaining the technical aspects of the regulations that implement

affirmative action plans and (2) provide any technical assistance on an as

needed basis. Additionally, since complaints filed against an employer are

covered by both ADA and affirmative action regulations, the officials said it

was imperative that the regulations be consistent and DOL has efforts

under way to improve the consistency of the regulations.

Company Example 13 A Minco Technologies Lab, Inc., official said developing an affirmative

action plan is time consuming and complex due to numerous and changing

regulatory requirements. The official said the affirmative action plan

requirements in Executive Order 11246, administered by DOL/OFCCP, are the

most problematic human resources regulations the company faces. She

said one problem is that it is difficult for businesses to stay aware of the

changes in regulatory requirements; they cannot ask the “enforcers” for

information without potentially calling their actions into question.

Agency Response 13 According to DOL/ESA officials, the agency does not seek reprisal against

companies that ask the agency for information on developing a plan. The

officials said OFCCP continuously provides free technical assistance to all

segments of the public from its national, regional, and district offices. They

4

Executive Order 11246, as amended, prohibits discrimination in employment on the basis of race,

color, religion, sex, or national origin by federal contractors and subcontractors.

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said OFCCP is currently developing supply and service and construction

technical assistance guides to further help federal contractors (such as

Minco) develop an affirmative action plan and understand the regulatory

requirements. OFCCP officials said they expect both guides to be available

before the end of 1996. OFCCP officials also said that OFCCP offices hold

“grass roots meetings” with contractor representatives to discuss a variety

of topics with which they are concerned. The OFCCP offices also hold

technical assistance seminars and industry liaison conferences to assist

contractors to fulfill their nondiscrimination and affirmative action

obligations.

Companies’ Concerns

About Rigid and

Inflexible Regulations

This section includes examples of companies’ concerns about regulatory

requirements that they consider to be unnecessarily rigid or inflexible and

agencies’ responses to these concerns.

Company Example 14 Bank A officials said that although they believed the FDIC requirement to

have a contingency plan for their information processing systems is a

worthwhile goal, the guidelines for the development of such a plan, as they

relate to small banks, make it difficult to prepare. The officials said the

guidelines are excessively detailed, requiring detailed testing, and appear

unreasonable for a small bank such as Bank A.

Agency Response 14 According to FDIC officials, the company’s assertion that a bank’s board of

directors must develop a contingency plan for information processing is

incorrect. They said the Federal Financial Institutions Examination

Council adopted a policy statement on a contingency plan. The officials

said the plan is not mandated by a statute or regulation. They said the

implementation of a contingency plan is intended to ensure that a financial

institution is able to recover from a disruption to its operations or a break

in service from its data-processing server. FDIC officials said the listing of

items and factors in the policy statement is intended as a flexible tool for

management to use in developing its own unique contingency plan.

Without such a plan in place, they said a natural or other disaster could

cause devastating disruptions to the institution’s operations and customer

services, resulting in unrecoverable losses, both financial and reputational.

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Company Example 15 Officials from the paper company said OSHA’s lead exposure standards5

 are

highly prescriptive and expensive. They said any maintenance person

working on a valve who scrapes away any paint containing lead,

regardless of the amount of lead it contains (e.g., lead-intensive paint

versus those paints with only 0.0001 percent of lead) must first put on a

respirator and other personal protective equipment. However, before

doing so, the officials said the employee must first obtain a doctor’s

permission and be “fit tested.” The officials said that this process costs the

company about $1.25 million per year.

Agency Response 15 OSHA officials said the Lead Standards for Construction6

 do not apply to

routine maintenance activities not associated with construction work.

They said the General Industry Standard7

 would apply in these situations.

In addition, they said neither of the standards requires workers to wear

respirators or other personal protection equipment while performing the

task cited by the paper company, unless exposures are above the

permissible exposure limit. According to the officials, medical clearances

are not required under these standards unless an employee demonstrates

difficulty breathing when using a respirator.

Companies’ Concerns

About Paperwork and

Process Issues

This section includes examples of companies’ concerns about regulatory

paperwork/process being excessive and too costly and agencies’

responses to the concerns.

Company Example 16 The fish farm officials said they want to start a pension plan for their

employees, but have not done so because the Employee Retirement

Income Security Act’s (ERISA) numerous and detailed reporting and

recordkeeping requirements make the plan cost prohibitive.

Agency Response 16 DOL, IRS, and the Pension Benefit Guaranty Corporation (PBGC) mentioned

several pension plan simplification proposals that were announced in

June 1995. The agencies’ officials said these proposals, if enacted, would

simplify several rules currently governing pension plans and permit small

5

29 C.F.R. 1926.

6

29 C.F.R. 1926.62.

7

29 C.F.R. 1910.1025.

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employers to establish pension plans that would be both simpler and less

expensive for small employers to administer.8

To reduce the burden of complying with ERISA paperwork requirements,

the three agencies indicated that they jointly developed the Form 5500

Series to enable plan administrators to satisfy their reporting obligations

under titles I, II, and IV of ERISA with a single annual report form. IRS

officials said the Service, along with PBGC and DOL, is in the process of

significantly simplifying and shortening the Form 5500 and developing

software that will allow plans to file the form automatically by using a

self-editing program. IRS officials also said when there are changes in the

law or regulations, IRS publishes model plan amendments and streamlined

application procedures to lessen the costs of amending plans. IRS officials

said when employers have made minor plan amendments, they may apply

for an IRS review of the amendments using a simplified application form.

Company Example 17 A Bank C official said the Truth in Savings Act (Regulation DD) requires

that every fee charged to a customer’s account must be separately

described on their statement, resulting in the bank’s creating 15 new forms

for tellers to complete. In addition, an official said that when Regulation

DD was first implemented, all of the bank’s computer systems had to be

reprogrammed to produce savings yield information and new account

statements, costing the bank an estimated $3.8 million in its home state

operations alone.

Agency Response 17 According to FRB officials, Regulation DD requires institutions to disclose

the annual percentage yield earned, any fees imposed, and certain other

information on the periodic statements to consumers. As a result, the

officials said banks must separately disclose on periodic statements any

account-related fees that are assessed. However, they said there is no

requirement that bank personnel complete forms to accomplish this

purpose.

The officials said FRB is aware of the costs involved in implementing

Regulation DD. They said shortly after Regulation DD’s enactment, FRB

conducted a survey of institutions’ start-up costs to implement the

regulation. According to FRB officials, the survey revealed that

data-processing and systems changes were indeed the most expensive

8

IRS officials later noted that many of these proposals were enacted in the Small Business Job

Protection Act of 1996.

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compliance costs for institutions, accounting for approximately 40 percent

of the total start-up compliance costs. When Regulation DD was finalized,

the officials said FRB implemented several changes on the basis of

comments from industry to help minimize costs, particularly those related

to periodic statements. For example, they said that information sent in

connection with time accounts and passbook savings accounts is exempt

from the periodic statement rules.

Company Example 18 The official from the tank car company said the Hazardous Waste

Shipment and Waste Minimization reports required by RCRA duplicate other

information and are costly to produce (more than $3,000 in 1994). The

official said EPA requires the reports to be filed biennially with the EPA

Regional Administrator even though almost all of the information is

already available to EPA on the shipment manifests for hazardous wastes,

which each company is required to keep. He said the only piece of

information that the report requests that currently is not on the manifest

could be incorporated into the manifest without a problem.

Agency Response 18 EPA officials said they appreciate the company’s concern about

redundancy of data required on the biennial report and manifest, and they

are working to reduce the reporting burden and improve the usefulness of

collected data. According to the officials, the Office of Solid Waste is

working with states to revise the manifest system and to revise or replace

the biennial report, with the objective of eliminating duplicative and

overlapping reporting burdens. They said EPA is considering a certification

option that would reduce the need for the detailed reporting on waste

minimization.

Company Example 19 Multiplex, Inc., officials said EPA paperwork and reporting requirements on

the company’s use of hazardous materials are in some cases duplicative.

For example, under the Emergency Planning and Community

Right-to-Know Act (EPCRA), the company has to submit Form R reports to

EPA. The officials said the Form R report contains the same information

that they submit to the state environmental agency in a “Tier II” report.

Agency Response 19 According to EPA officials, Multiplex could reduce its EPCRA section 313

reporting burden. The officials said that beginning with reporting year

1995, the EPCRA reporting criteria were changed to enable facilities that

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had less than 500 pounds of an annual reportable amount of a listed toxic

chemical to submit a certification statement in lieu of a Form R, thereby

reducing the reporting elements from nine to two pages. They said the

data on Multiplex’s Form R for the 1993 reporting year indicate that the

company could take advantage of this streamlined reporting process.

In addition, the officials said EPA is looking at ways to consolidate

environmental reports. They said EPA is particularly looking at replacing a

multitude of reporting forms currently required for all the different types

of pollution discharged from a single facility with a “one-stop” reporting

system. They believed such a comprehensive approach to information

collection and management would help to eliminate duplicative reporting

while providing an approach that would be more efficient for EPA and its

state partners.

Concerns About

Severe Penalties

Imposed on

Businesses

This section includes examples of companies’ concerns about the severity

of penalties imposed on them for noncompliance with federal regulations

and agencies’ responses to the concerns.

Company Example 20 An official from the tank car company said EPA regulatory requirements

that make managers personally responsible for their companies’

compliance with environmental standards are unreasonable. The official

said that EPA’s regulations for emergency planning and notification under

the Comprehensive Environmental Response, Compensation, and Liability

Act state that a manager who fails to provide local officials with the

required notice regarding a release of hazardous substances can be fined

up to $25,000 or imprisoned for up to 2 years or both. He said that if these

personal responsibility requirements are continued or expanded, it will be

difficult to find anyone willing to manage such companies.

Agency Response 20 According to EPA officials, the tank car company’s statements regarding

personal liability of the managers are inaccurate. The officials said

managers are not held personally responsible for their companies’

compliance with environmental standards. They said it is EPA’s policy to

issue civil administrative complaints to the owners of firms (e.g.,

partnerships or corporations), rather than to the individuals who operate

firms.

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However, EPA officials said managers, like all other individuals, are held

personally responsible for their own violations when there is a criminal

element to the action. They said that under EPCRA, the responsibility to

inform a community about an environmental release of a hazardous

substance is a fundamental duty to protect public safety. EPA officials said

any person who knowingly and willfully fails to provide the required

notice may be imprisoned for no more than 2 years and fined up to

$250,000. Similarly, under the Comprehensive Environmental Response,

Compensation, and Liability Act, any person in charge of a vessel or

facility who fails to give notice to the National Response Center of the

release of a reportable quantity of a hazardous substance as soon as he/she

has knowledge of such release, may be imprisoned for no more than 3

years and fined up to $250,000. This notice requirement is necessary to

ensure that risk from the hazardous substance to the public health and the

environment are minimized.

Company Example 21 Zaclon, Inc., officials said the company is appealing an $81,000 fine for

failure to respond on time to an EPA request for information related to

RCRA. Company officials said a letter EPA sent to the company requesting

the information was mistakenly filed away by a former company

employee. They said the letter was not discovered until EPA imposed the

fine 18 months later without any follow-up or other communication

regarding the original request. The officials said they are also disturbed

that the fine was imposed on them because of a procedural matter (failing

to report information), not for noncompliance with something that had a

real environmental impact.

Agency Response 21 According to EPA officials, some aspects of Zaclon’s concern in this

example are inaccurate. First, the officials said Zaclon is not appealing an

$81,000 fine. They said that although EPA initially proposed that Zaclon pay

a penalty of $81,000, the proposed penalty was reduced to $37,600 after

discussions with the company.9

 In addition, EPA officials said the violation

at issue did not involve an information request. They said Zaclon was sent

a notification of its regulatory obligation to either file a RCRA permit

application for a hazardous waste pile at a facility the company had

acquired or submit a demonstration of equivalency, indicating that the

waste pile had been “clean closed” (closed in an environmentally

9

A hearing was conducted in the fall of 1994 and an Initial Decision by the Administrative Law Judge is

pending.

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protective manner as required in the hazardous waste regulations10). EPA

officials said the company’s obligation to either obtain a permit or

demonstrate environmentally protective closure of a hazardous waste pile

is not a “procedural matter.” They said this obligation is a substantive

requirement necessary to ensure that hazardous waste management units

are designed and operated so as to prevent releases of hazardous

constituents into the environment.

The officials agreed that there was no communication between EPA and the

company on this matter after the agency sent the initial letter to the

company about its obligation and EPA’s filing of the enforcement action.

They also said the agency sent the company a certified letter, which the

company acknowledges receiving, to initially notify them of their

obligation. EPA officials said RCRA is a “strict liability” statute; companies

have a positive obligation to comply even if EPA does not issue reminders

of their responsibility. The officials said issues of good faith are important

factors in such situations, but they are appropriately considered in the

penalty calculation and do not affect liability for a violation.

EPA officials said although the company might have wanted EPA to initiate

additional contact before taking any enforcement action, the agency has

limited resources to do so, and the pressure of other work sometimes

precludes this opportunity. In addition, the officials said some companies

have a record of being resistant to compliance with environmental

matters, which would make additional efforts by EPA unproductive.

Companies’ Concerns

About Regulators’

“Gotcha”

Enforcement

Approach

This section includes examples of companies’ concerns about regulators’

“gotcha” approach to enforcing federal regulations and agencies’

responses to these concerns.

Company Example 22 Officials from the petrochemical company said that EPA’s enforcement of

environmental regulations is unnecessarily harsh. They said enforcement

actions can be initiated even when companies self-report deficiencies

found through internal auditing practices. They also said that a minute

deviation from a stringent emission level can subject a facility to

1040 C.F.R. part 264.110-115.

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enforcement action, even if the facility is in compliance 99.9 percent of the

time and no degradation of public health or the environment exists.

Agency Response 22 EPA officials said they needed additional information about the company to

fully respond to this concern. However, the officials said EPA recognizes

the importance of internal auditing and has taken steps to encourage such

auditing. They said EPA’s policies generally provide penalty reductions for

such matters as good faith efforts to comply, ability to pay, and other

factors. The officials said EPA published on December 22, 1995,

Self-Policing Incentives: Discovery, Disclosure, Correction and Prevention

of Violations, which sets forth guidelines to reduce or eliminate the

“gravity” component of a penalty when (1) the self-disclosure meets

certain conditions and (2) no criminal conduct or imminent and

substantial endangerment is involved. However, they said to ensure a

“level field” for those companies that comply, no penalty reduction is

appropriate when the violations involve significant economic benefit to

the violator.

EPA officials said they consider noncompliance with environmental

reporting and monitoring mechanisms to be significant. They said since it

would be prohibitively expensive for regulators to inspect all facilities on a

regular basis, EPA relies on company-maintained records, reports, and

notifications as the only realistic mechanisms to ensure compliance.

Company Example 23 A Multiplex official suggested that OSHA’s policy of immediately imposing

fines for violations places an emphasis on finding violations to justify

enforcement actions, rather than on working with the company to

encourage compliance. He said many OSHA inspectors focus on finding

something wrong because citing violations demonstrates what OSHA views

as good job performance. The official recommended that OSHA notify a

company of any violations identified during an inspection and allow 30

days for the company to come into compliance before assessing a fine.

Agency Response 23 According to OSHA officials, the Occupational Safety and Health Act

provides for monetary penalties to be levied as an incentive for employers

to comply voluntarily with OSHA standards; OSHA penalties are not intended

to serve a punitive purpose. They said OSHA is aware of employers’

concerns about OSHA inspectors’ seeming to care less about worker safety

than about meeting perceived “quotas” for citations and penalties. They

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said OSHA never used quotas but in the past had used citations and

penalties as performance measures. However, they said this practice was

stopped and performance will be measured by OSHA’s success in making

safety and health improvements.

The officials said OSHA is making several changes in its enforcement

efforts. For example, they said OSHA is changing its fundamental operating

model from one of command-and-control to one that provides employers

with a real choice between cooperative partnerships and a traditional

enforcement relationship. In another example, they said OSHA is expanding

its “quick fix” program. They said this program provides an incentive for

employers to abate hazards quickly by allowing the employers to receive a

penalty reduction if they abate hazards immediately and permanently

during the inspection. They said employees benefit under this program by

getting more employee protection, and OSHA employees are freed from

follow-up abatement inspections and paperwork.

Companies’ Concerns

About Regulators’

Lack of Knowledge

and Assistance

This section includes examples of companies’ concerns about regulators

who (1) lack knowledge about the industries they regulate and (2) provide

little compliance assistance to companies. Following each of the examples

are the agencies’ responses.

Company Example 24 Officials from the hospital said that, in many instances, OSHA regulators do

not sufficiently inform companies about upcoming regulatory changes and

how to comply with them. They believe that OSHA’s consulting function

should be energized, which would concurrently move the agency posture

into more of a collaborative mode (i.e., away from a “policing” posture that

presumes violations until they are disproved by the company).

Agency Response 24 According to OSHA officials, OSHA is increasing emphasis on interactions

with stakeholders and expects this emphasis to enable the agency to

successfully streamline and rationalize the existing body of regulations

and to build a set of common-sense regulations. Also, OSHA officials said

they are committed to simplifying access to workplace safety and health

regulations and increasing efforts to provide compliance assistance to

employers. They said employers, particularly small businesses, are

encouraged to use the free consultation service (available through state

governments) to help them identify potential hazards at their workplace

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and improve their safety management systems. The program, offered free

of charge in all states, is completely separate from the enforcement

program, and participants cannot be cited during the consultation visit.

To help businesses recognize and protect workers from workplace

hazards, the officials said that OSHA has implemented a number of

information-dissemination projects and plans to undertake new initiatives

to improve the availability of safety and health data to the public, such as

using computer technology to assist employers and placing the text of

rules on the Internet.

Company Example 25 The fish farm officials said those involved in the federal policymaking

process sometimes do not address the underlying cause of the problem.

For example, they said Congress established the Aquatic Nuisance Species

Task Force after the accidental introduction of nonindigenous zebra

mussels into the Great Lakes when a ship dumped bilge water. According

to the officials, the task force recommendations suggested numerous

actions businesses should be required to do to reduce the problems

caused by aquatic nuisance species. The officials also said they spent

significant time and resources reviewing the task force’s draft reports and

providing comments, but the task force virtually ignored the comments

they received from industry until the final draft.

Agency Response 25 According to officials in the Department of the Interior’s Fish and Wildlife

Service, the fish farm is misinformed about the Service’s activities under

the Nonindigenous Aquatic Nuisance Prevention and Control Act of 1990.

They said the company’s concern is related to section 1207 of the act. The

only regulatory authority in the entire act is over ballast water control and

implementation of the Aquatic Nuisance Species Program. In addition, the

act requires the task force to recommend in a report to Congress

(Intentional Introductions Policy Review) ways to reduce the risk of

adverse consequences of future intentional introductions.

Fish and Wildlife Service officials said public review was an integral part

of the development of the task force’s report. They said an interagency

committee conducted the review and prepared the report to Congress. The

officials said the review was done in consultation with state fish and

wildlife agencies; other regional, state, and local entities; potentially

affected industries; and other interested parties. They said meetings were

open to the public and public comments were always accepted. The

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Appendix II 

Companies’ Concerns About Regulatory

Issues and Agencies’ Responses

officials said, during the public review and comment period (August 1993

through late October 1993), they received 145 written comments from

many sources, including tropical fish businesses and state and Federal

agencies. They said all of the comments brought a fresh perspective to the

task force and were thoroughly considered and incorporated, as

appropriate, into the final report.

The Service’s officials said that, without knowing the name of the

company that made these comments, it is impossible for them to provide a

specific response to their concern. However, the officials said the final

comments of the company seem to indicate that the company’s concerns

were eventually satisfied.

Companies’ Concerns

About Regulatory

Coordination and

Duplication

This section includes examples of companies’ concerns about duplication

and a lack of coordination of regulations among federal agencies and

between federal and state or local levels of government. Agencies’

responses immediately follow each example.

Company Example 26 A Minco official said the Family and Medical Leave Act (FMLA) requires

employees to submit medical documentation to employers that may

conflict with privacy protection requirements under the ADA. For example,

he said employees are required to provide employers with medical

documentation to support FMLA leave requests. However, according to the

official, that documentation may reveal information about a specific

medical condition that the ADA requires be kept from employers.

Agency Response 26 Both EEOC and DOL officials disagree with Minco’s statement about a

conflict between FMLA and ADA regulations. EEOC officials said the FMLA

provision allowing employers to ask for certification that an employee has

a serious health condition does not conflict with ADA restrictions on

disability-related inquiries of employees.

According to DOL officials, the purpose of FMLA’s medical certification

provisions (29 U.S.C. 2613) is to allow employers to obtain information

from a health care provider to verify that an employee or an employee’s

family member has a serious health condition and the likely periods of

absence by the employee. The officials said the regulatory medical

certification provisions were developed in consultation with EEOC to

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Companies’ Concerns About Regulatory

Issues and Agencies’ Responses

ensure consistency with the ADA’s provisions. They said that for privacy

reasons, and to be consistent with the ADA, all information on the form is

generally limited to the medical facts of the medical condition (of the

employee or family member) for which the employee is taking FMLA leave.

They said employers must maintain the same level of confidentiality for

medical documents under FMLA and the ADA.

Company Example 27 Officials from the glass company said one of their major regulatory

problems is state regulations (issued either independently or at the urging

of federal agencies, such as EPA) that vary from one state to another. They

said it is far more costly to track and comply with 50 different regulations

than with a single federal regulation in a given area. They said the lack of

uniformity among the various states in which the company operates

creates a real burden on the company. The officials said the company must

devote significant resources (labor hours, computer systems, and

consultant costs) to dealing with differing rules, regulations, and reporting

requirements in the various state departments of revenue/taxation, state

insurance commissions, state unemployment departments, and state

health departments. For example, they said one state in which they

operate requires warning labels on all products shipped to that state that

“expose” citizens to any of over 300 chemicals, regardless of how trivial

the alleged exposure. As a result, the officials said a company must either

have special labels for that state or must change all of its product labels to

meet that state’s standard.

Agency Response 27 According to EPA officials, the right for states to establish their own laws

has philosophic and legal underpinnings embodied in the Constitution.

The officials said although Congress has specifically debated whether

federal environmental requirements should supersede any state

requirements or whether they should be the “minimum floor” or

“maximum ceiling,” in most cases, the prevailing position is that states

should be allowed to establish equivalent or stronger requirements.

The officials said EPA has taken strides toward harmonizing requirements

between states and the federal level and often encourages states to

coordinate requirements or practice reciprocity among themselves. For

example, the officials said EPA has a number of pesticide programs

designed to harmonize state laws and regulations for pesticide

manufacturing, sales, and use. Also, in response to complaints from

transporters of hazardous waste about the multiplicity of individual state

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Appendix II 

Companies’ Concerns About Regulatory

Issues and Agencies’ Responses

requirements, the officials said EPA sponsored a Regulatory Negotiation to

develop a uniform national manifest that will meet not only federal

information requirements, but also those of every state through which a

shipment of hazardous waste might pass.

Company Example 28 An official from the tank car company said the manufacturer did not

understand why EPA required a federal National Pollutant Discharge

Elimination System (NPDES) permit that duplicated information they filed

with a state agency to obtain their state NPDES permit. He said the failure of

EPA to honor a state permit, which required the same stringent standards,

caused duplication of effort and of data submission. After 2 years of

debate and the issuance of an EPA Administrative Order, EPA reportedly

fined the company several hundred thousand dollars for not obtaining a

federal permit. The company official also said EPA would not work with the

company regarding this issue or consider the state permit as evidence of

good faith. According to the company official, the company decided to

“cut its losses” and just pay the fine, rather than pay for litigation.

Agency Response 28 EPA said the tank car company has a facility operating in one of the few

states that is not authorized to administer EPA’s NPDES program. According

to the officials, although a state may choose to separately regulate

discharges to surface waters, the state cannot issue CWA permits unless it

is authorized by EPA to operate an NPDES program. They said in states

without this authorization, a company must obtain a federal NPDES permit

in addition to any requirements under a similar state permit program.

Thus, contrary to the company’s statement, the EPA officials said this state

does not have a permit system equivalent to the NPDES program. They

acknowledged that the state issued a wastewater discharge permit to the

facility. However, they said the permit did not accurately reflect the nature

of the discharge or the actual operations on-site; therefore, the permit was

neither legally nor practically the equivalent of an NPDES permit.

Company Example 29 Officials from the paper company said the DOT and OSHA regulations that

define corrosive materials conflict. They said DOT defines “corrosive”

material by using a patch test on the skin of albino rabbits, whereas OSHA

defines a material as corrosive by using a chemical pH test (an easier and

more accurate test). They said that different agencies’ using different

standards is confusing, making it difficult to know which standard to

follow.

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Appendix II 

Companies’ Concerns About Regulatory

Issues and Agencies’ Responses

Agency Responses 29 Both DOT and OSHA officials said their definitions of corrosive materials do

not conflict. They said materials are considered to be corrosive when a

chemical causes visible destruction or irreversible alterations to human

skin tissue at the site of contact.

For example, according to OSHA officials, the Hazard Communication

Standard also defines a chemical as corrosive if, when tested on the intact

skin of albino rabbits by the method described by DOT in Appendix A to 49

C.F.R. part 173, it destroys or irreversibly changes the structure of the

tissue at the site of contact after 4 hours of exposure. The officials said

OSHA does not require pH testing to determine corrosivity or preclude its

use. Instead, they said the Hazard Communication Standard requires only

that “available scientific evidence” be used to identify chemical hazards;

such evidence may include results of manufacturers’ tests or results of any

published human, animal, or in vitro studies.

DOT officials said the use of pH testing in determining whether a material is

corrosive is only useful for aqueous materials (those containing water).

They said the definition of a corrosive material was recently revised to

adopt the Organization for Economic Cooperation and Development’s

guidelines for determining corrosion. According to this rule, DOT officials

said a material in an aqueous solution with a pH of 2 or less or 12 or more

may be considered corrosive.

Page 123 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Appendix III 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

Curtis Copeland, Assistant Director, (202) 512-8101

Don Allison, Evaluator-in-Charge

Ellen Wineholt, Senior Evaluator

Dion Anderson, Evaluator

Kathy Cunningham, Evaluator

Scott Derrick, Evaluator

Kiki Theodoropoulos, Evaluator (Communications Analyst)

Thomas Beall, Technical Advisor

National Security and

International Affairs

Division, Washington,

D.C.

Cheryl Goodman, Senior Evaluator

Thomas Melito, Senior Economist

Page 124 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Appendix III 

Major Contributors to This Report

Page 125 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Appendix III 

Major Contributors to This Report

Page 126 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Related GAO Products

Regulatory Reform: Implementation of the Regulatory Review Executive

Order (GAO/T-GGD-96-207, Sept. 25, 1996).

Paperwork Reduction: Burden Reduction Goal Unlikely To Be Met 

(GAO/T-GGD/RCED-96-186, June 5, 1996).

Approaches for Environmental Regulations (GAO/RCED-96-135R, Apr. 25,

1996).

Tax System Burden: A Perspective on the Compliance Burden of the U.S.

Tax System (GAO/T-RCED-96-100, Apr. 4, 1996).

Regulatory Compliance for NIH Grantees (GAO/HEHS-96-90R, Mar. 25, 1996).

Regulatory Reform: How Can Congress Assess the Administration’s

Initiatives? (GAO/T-GGD-95-206, July 18, 1995).

Costs of Regulation (GAO/PEMD-95-24R, June 15, 1995).

EPA and the States’ Environmental Challenges Require Better Working

Relationship (GAO/RCED-95-64, Apr. 3, 1995).

Regulatory Reform: Information on Costs, Cost-Effectiveness, and

Mandated Deadlines for Regulations (GAO/PEMD-95-18BR, Mar. 8, 1995).

Clean Air Rulemaking: Tracking System Would Help Measure Progress of

Streamlining Initiatives (GAO/RCED-95-70, Mar. 2, 1995).

Tax System Burden: Tax Compliance Burden Faced by Business

Taxpayers (GAO/T-GGD-95-42, Dec. 9, 1994).

Tax Administration: Compliance Measures and Audits of Large

Corporations Need Improvement (GAO/GGD-94-70, Sept. 1, 1994).

Environmental Regulation: Differences Remain Between EPA and OMB Over

Paperwork Requirements (GAO/RCED-94-254, Aug. 23, 1994).

Workplace Regulation: Information on Selected Employer and Union

Experiences (GAO/HEHS-94-138, June 30, 1994).

Page 127 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
Related GAO Products

Paperwork Reduction Act: Opportunity to Strengthen Government’s

Management of Information Technology (GAO/T-AIMD/GGD-94-126, May 19,

1994).

Regulatory Flexibility Act: Status of Agencies’ Compliance (GAO/GGD-94-105,

Apr. 27, 1994).

Regulatory Burden: Recent Studies, Industry Issues, and Agency Initiatives

(GAO/GGD-94-28, Dec. 13, 1993).

Paperwork Reduction: Reported Burden Hour Increases Reflect New

Estimates, Not Actual Changes (GAO/PEMD-94-3, Dec. 6, 1993).

Paperwork Reduction: Agency Responses to Recent Court Decisions

(GAO/PEMD-93-5, Feb. 3, 1993).

Risk-Risk Analysis: OMB’s Review of a Proposed OSHA Rule (GAO/PEMD-92-33,

July 2, 1992).

Environmental Protection: Meeting Public Expectations With Limited

Resources (GAO/RCED-91-97, June 18, 1991).

(246066) Page 128 GAO/GGD-97-2 Measurement Challenges and Companies’ Concerns
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