United States General Accounting Office

GAO Testimony

Before the Subcommittee on Commercial and

Administrative Law, Committee on the Judiciary, House of

Representatives

For Release on Delivery

Expected at

10:30 a.m. EDT

Thursday,

March 6, 1997

Congressional Review Act

Statement of Robert P. Murphy, General Counsel

GAO/T-OGC-97-29

Chairman Gekas, Mr. Nadler, and Members of the Committee:

I am pleased to appear before you today to discuss the General

Accounting Office’s responsibilities in the congressional review of agency

rulemakings under the Small Business Regulatory Enforcement Fairness

Act (SBREFA), and our experience in the 11 months since the statute was

enacted.

Congressional oversight of rulemaking as contemplated by SBREFA can be

an important and useful tool for balancing and accommodating the

concerns of American citizens and businesses with federal agency

rulemaking. It is important to assure that Executive branch agencies are

responsive to citizens and businesses about the reach, cost, and impact of

regulations without compromising the statutory mission given to those

agencies. SBREFA seeks to accomplish this by giving the Congress an

opportunity to review rules before they take effect and to disapprove

those found to be too burdensome, excessive, inappropriate, duplicative,

or otherwise objectionable.

Under SBREFA, before a rule can take effect, the federal agency must

submit the rule to both Houses of Congress and the GAO. GAO’s primary role

in this new mechanism is to provide the Congress with a quick review of

all “major” rules submitted to determine if the promulgating agencies have

complied with the procedural steps governing the regulatory process. For

rules that are determined to be “major,” GAO must provide its report to the

congressional committees of jurisdiction within 15 calendar days.

Major Rules SBREFA defines a “major” rule as one which has resulted in or is likely to

result in (1) an annual effect on the economy of $100 million or more; (2) a

major increase in costs or prices for consumers, individual industries,

government agencies or geographic regions; or (3) significant adverse

effects on competition, employment, investment, productivity, innovation

or on the ability of U.S.-based enterprises to compete with foreign-based

enterprise in domestic and export markets. SBREFA specifies that the

determination of what rules are “major” is to be made by the Office of

Information and Regulatory Affairs, Office of Management and Budget.

These rules cannot be effective until 60 days after publication in the

Federal Register or submission to Congress and GAO, whichever is later.

GAO is required to submit a report to the committees of jurisdiction by the

end of 15 calendar days containing GAO’s assessment of the federal

Page 1 GAO/T-OGC-97-29
agency’s “compliance with the procedural steps” required by the various

acts and executive orders bearing on the regulatory process enumerated in

SBREFA. These include the preparation of a cost-benefit analysis, where

required, and compliance with the Regulatory Flexibility Act, the

Unfunded Mandates Reform Act of 1995, the Administrative Procedure

Act, the Paperwork Reduction Act, and Executive Order No. 12866. Other

acts and executive orders which have been considered by federal agencies

in major rules submitted to GAO include executive orders about family

considerations, federalism, protected property rights, intergovernmental

partnership and civil justice, and the National Environmental Policy Act.

Our reviews are based on the information given to us by the promulgating

federal agency and any additional information we obtain during the 15-day

report preparation period. Because of the time constraints imposed by

SBREFA, GAO’s role is necessarily limited to a paper review of the processes

employed in the rulemaking under applicable statutory and regulatory

mandates. For example, in the area of cost-benefit analysis, we assure that

the federal agency has conducted some type of analysis, whether it is

called a cost-benefit analysis, economic impact analysis, or economic

analysis, and whether the analysis contains the three elements of a

cost-benefit analysis required under Executive Order No. 12866. These are

(1) an assessment of the costs and benefits, including the underlying

analysis, anticipated from the regulatory action, (2) the costs and benefits,

including the underlying analysis, of reasonably feasible alternatives

considered, and (3) why the planned regulatory action is preferable.

Also, we provide a copy of each major rule to the audit or evaluation group

within GAO that would be most interested to ascertain if GAO has performed

any work relevant to the rule which should be brought to the attention of

the Congress.

From the March 29, 1996, enactment of SBREFA through February 28, 1997,

GAO has received 58 major rules from federal agencies, and all of our

reports on these rules have been submitted by the statutory deadline.

Our major rule reports are available on the Internet within 24 hours of

transmittal to the committees of jurisdiction. In a recent week, our major

rule reports on the Internet were accessed 938 times and reports were

downloaded 273 times. In addition, the reports will be included in the GAO

Monthly List of Publications beginning next month, at which time paper

copies will be available through our document distribution system.

Page 2 GAO/T-OGC-97-29
It has been our experience that, with few exceptions, federal agencies

have sought to comply with the requirements of SBREFA, and, for the most

part, they have been successful.

On some occasions, where federal agencies failed to comply with SBREFA,

when we brought the matter to the attention of agency officials, corrective

action was taken. For example, the Environmental Protection Agency

stated that its rule on the Nitrogen Oxide Emission Reduction Program

would become effective upon publication in the Federal Register rather

than after the 60-day delay required by the statute. When this was brought

to the attention of EPA, it published a correction in the Federal Register

and delayed the effective date the required 60 days. Similarly, when we

pointed out to the Department of Housing and Urban Development (HUD)

that certain disclosure requirements should have been submitted to the

Office of Management and Budget (OMB) for review under the Paperwork

Reduction Act, HUD began steps to publish a correction to the final rule

and submit the matter for OMB approval.

One difficulty we have noted on a few occasions is the apparent failure of

some federal agencies to budget enough time into the regulatory process

to allow for the 60-day delay in the effective date of a major rule. The

Department of Health and Human Services, Health Care Financing

Administration did not allow for the 60-day delay when issuing “Revisions

to Payment Policies and Five Year Review of and Adjustments to the

Relative Value Units under the Physician Fee Schedule for the Medicare

Program,” citing the “good cause” exception found at 5 U.S.C.

§ 808(2) because Congress was not in session during most of the 60-day

period and the effective date was established by the Medicare statute. We

noted in our report to Congress that the “good cause” exception is only

available for rules that do not involve notice and public comment

procedures (those procedures normally followed in rulemaking) and since

HCFA had issued a notice of proposed rulemaking and received public

comments, the effective date could not be accelerated.

The Department of Agriculture, Rural Housing Service argued that the

60-day delay in the effective date of a rule entitled “Reengineering and

Reinvention of the Direct Section 502 and 504 Single Family Housing

Program” would result in a loss of the savings the rule would produce and

be contrary to the public interest. As with the Medicare payment revisions,

the rule had been previously issued as a notice of proposed rulemaking

and the section 808(2) “good cause” exception could not be invoked.

Page 3 GAO/T-OGC-97-29
Most recently, HUD in issuing a regulation entitled “Sale of HUD-Held Single

Family Mortgages” allowed for a 60-day delay in the effective date from the

date of publication in the Federal Register, January 24, 1997. Since HUD did

not file its report on the rule with Congress until February 6, 1997, the rule

was not delayed the required 60 days.

In addition to the major rule reports, GAO responded on September 16,

1996, to a request from the Chairman of the Subcommittee on Forests and

Public Land Management, Senate Committee on Energy and Resources,

addressing whether a memorandum issued by the Secretary of Agriculture

in connection with the Emergency Salvage Timber Sale Program

constituted a “rule” under SBREFA and should have been submitted to the

Houses of Congress and GAO before it could become effective. We

concluded that the Department of Agriculture erred in believing that the

memorandum was not a rule.

Nonmajor Rules SBREFA requires that agencies file with GAO and both Houses of Congress

copies of all rules, not just “major” rules. To date, we have received 3,609

nonmajor rules. Although the law is silent as to GAO’s role relating to the

nonmajor rules, we have established a database that would give minimal

information about the 15 rules we receive on the average each day. Our

database captures the title, the agency, the Regulation Identification

Number, the type of rule, the proposed effective date, date published in

the Federal Register, the congressional review trigger date, and any joint

resolutions of disapproval that may be enacted. We are working on a

system that would allow us to post the information currently contained in

our database on the Internet.

An expansion of this database could make it more useful, not only to GAO

for use in its oversight work, but to the Congress and to the public. We

have been working with executive agencies to get more substantive

information about the rules. Attached to this testimony is a copy of a

questionnaire designed to obtain the basic information about each rule

required by SBREFA (5 U.S.C. § 801(a)(1)(B)). This questionnaire asks the

agencies to report on such items as (1) whether the agency provided an

opportunity for public participation, (2) whether the agency prepared a

cost-benefit analysis or a risk assessment, (3) whether the rule was

reviewed under executive orders for federalism or takings implications,

and (4) whether the rule was economically significant.

Page 4 GAO/T-OGC-97-29
In developing this questionnaire we consulted with Executive branch

officials to insure that the requested information would not be

unnecessarily burdensome. We circulated the questionnaire for comment

to 20 agency officials with substantial involvement in the regulatory

process, including, of course, officials from the Office of Information and

Regulatory Affairs. The Administrator of OIRA submitted a response in her

capacity as Chair of the Regulatory Working Group, consolidating

comments from all the agencies represented in that group. It is the

position of the group that the completion of this questionnaire for each of

the 4,000 to 5,000 rules we expect to be filed each year is too burdensome

for the agencies concerned. The group points out that the majority of rules

submitted each year are routine or administrative or are very narrowly

focused regional, site-specific, or highly technical rules.

We continue to believe that it would further the purposes of SBREFA for a

database of all rules submitted to GAO to be available for review by

Members of Congress and the public. We will continue our efforts to

obtain agreement of the Executive branch on this matter.

If the Internet database is to be of optimal use to interest groups or the

general public, it should direct the public to the congressional committees

of jurisdiction so comments about pending rules can be forwarded to the

legislators most able to address them. Ascertaining the committees of

jurisdiction for the nonmajor rules has been difficult because of the sheer

number of rules submitted and the lack of consistency in which the rules

are cited in the Congressional Record. We have initiated discussions with

the House Parliamentarian to more efficiently obtain this information

electronically. We hope at some point to tie GAO’s database to that used by

the Parliamentarian, so that one comprehensive body of information is

available concerning regulations. We plan to initiate similar discussions

with the Senate Parliamentarian.

Thank you, Mr. Chairman. This concludes my prepared remarks. I would

be happy to answer any questions you may have.

Page 5 GAO/T-OGC-97-29
Page 6 GAO/T-OGC-97-29
Page 7 GAO/T-OGC-97-29
Ordering Information

The first copy of each GAO report and testimony is free.

Additional copies are $2 each. Orders should be sent to the

following address, accompanied by a check or money order

made out to the Superintendent of Documents, when

necessary. VISA and MasterCard credit cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address

are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 6015

Gaithersburg, MD 20884-6015

or visit:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders may also be placed by calling (202) 512-6000 

or by using fax number (301) 258-4066, or TDD (301) 413-0006.

Each day, GAO issues a list of newly available reports and

testimony. To receive facsimile copies of the daily list or any

list from the past 30 days, please call (202) 512-6000 using a

touchtone phone. A recorded menu will provide information on

how to obtain these lists.

For information on how to access GAO reports on the INTERNET,

send an e-mail message with "info" in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov

PRINTED ON RECYCLED PAPER
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. G100