United States General Accounting Office

GAO Testimony

Subcommittee on National Economic Growth, Natural

Resources, and Regulatory Affairs, Committee on

Government Reform and Oversight, House of

Representatives

For Release on Delivery

Expected at

2:00 p.m., EST

Wednesday,

June 17, 1998

CONGRESSIONAL REVIEW

ACT

Update on Implementation

and Coordination

Statement of Robert P. Murphy, General Counsel

GAO/T-OGC-98-55

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

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

Accounting Office’s experience in fulfilling its responsibilities under the

Congressional Review Act (CRA) and our efforts to coordinate

implementation of the Act with the Office of Management and Budget’s

Office of Information and Regulatory Affairs (OIRA).

Since I testified before this Subcommittee on March 10, 1998, in some

areas we have seen enhanced cooperation from OIRA in implementing the

CRA. In addition, executive branch and independent agencies appear to be

more cognizant of their responsibilities under the requirements of the CRA.

However, there remain areas of concern. After a brief review of the

operation of the statute, I will discuss what progress has been made in

four areas during the past 3 months.

Under CRA two types of rules, major and nonmajor, must be submitted to

both Houses of Congress and the GAO before either can take effect. CRA

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

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

increase in costs or prices for consumers, individual industries,

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

effects on competition, employment, investment, productivity, innovation,

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

enterprises in domestic and export markets. CRA specifies that the

determination of what rules are major is to be made by OIRA. Major rules

cannot be effective until 60 days after publication in the Federal Register

or submission to Congress and GAO, whichever is later. Nonmajor rules

become effective when specified by the agency, but not before they are

filed with the Congress and GAO.

GAO’s primary role under CRA is to provide the Congress with a report on

each major rule concerning GAO’s assessment of the promulgating federal

agency’s “compliance with the procedural steps” required by various acts

and executive orders governing the regulatory process. These include

preparation of a cost-benefit analysis, when required, and compliance with

the Regulatory Flexibility Act, the Unfunded Mandates Reform Act of 1995,

the Administrative Procedure Act, the Paperwork Reduction Act, and

Executive Order No. 12866. GAO’s report must be sent to the congressional

committees of jurisdiction within 15 calendar days.

Page 1 GAO/T-OGC-98-55
Although the law is silent as to GAO’s role relating to the nonmajor rules,

we believe that basic information about the rules should be collected in a

manner that can be of use to Congress and the public. To do this, we have

established a database that gathers basic information about the 15-20 rules

we receive on the average each day. Our database captures the title, the

agency, the Regulation Identification Number, the type of rule, the

proposed effective date, the date published in the Federal Register, the

congressional review trigger date, and any joint resolutions of disapproval

that may be enacted. We have made this database available, with limited

research capabilities, on the Internet. I will discuss shortly our belief that

this database would have more significant value to the Congress if the

executive branch agencies would cooperate with GAO and provide

additional information relevant to each rule.

Since the congressional rulemaking review provisions of CRA were enacted

on March 29, 1996, our Office has received 131 major and 9,052 nonmajor

rules from executive branch and independent agencies.

Unfiled Rules As noted earlier, before a rule can become effective, it must be filed in

accordance with the statute. Prior to the March 10 hearing, GAO conducted

a review to determine whether all final rules covered by CRA and published

in the Federal Register were filed with the Congress and GAO. We

performed this review to both verify the accuracy of our database and to

ascertain the degree of agency compliance with CRA.

Our review covered the 10-month period from October 1, 1996, to July 31,

1997. In November 1997, we submitted to OIRA a computer listing of the

rules that we found published in the Federal Register but not filed with our

Office. This initial list included 498 rules from 50 agencies. OIRA distributed

this list to the affected agencies and departments and instructed them to

contact GAO if they had any questions regarding the list. Beginning in

mid-February, because 321 rules remained unfiled, we followed up with

each agency that still had rules which were unaccounted for. OIRA did not

participate in the follow-up effort.

Our Office experienced varying degrees of responses from the agencies.

Several agencies, notably the Environmental Protection Agency and the

Department of Transportation, took immediate and extensive corrective

action to submit rules that they had failed to submit and to establish

fail-safe procedures for future rule promulgation. Other agencies

responded by submitting some or all of the rules that they had failed to

Page 2 GAO/T-OGC-98-55
previously file. Several agencies are still working with us to assure

100 percent compliance with CRA. Some told us they were unaware of CRA

or of the CRA filing requirement.

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

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

been filed;

• 182 were found not to be covered by CRA as rules of particular applicability

or agency management and thus were not required to be filed;

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

• 15 rules from six agencies had not been filed.

As we noted at the hearing, we believe OIRA should have played a role in

ensuring that agencies were both aware of the CRA filing requirements and

were complying with them.

Last week, our Office concluded a second review covering the 5-month

period from August 1, 1997, to December 31, 1997, which we conducted in

the same manner as the prior review.

The initial list which we forwarded to OIRA on April 2 for distribution to the

concerned agencies contained 115 rules from 21 agencies. On June 2, OIRA

agreed to follow up with the agencies that had not responded. As of

June 11, 45 of the 115 rules had been filed; 25 were found not to be subject

to CRA because they were rules of particular applicability or agency

management and 24 had been previously timely submitted and our

database was corrected. Twenty-one rules from eight agencies remain

unfiled.

I would like to point out two areas which show improvement. First, the

number of unfiled rules which should have been filed were 66 for the

5-month period. This is down markedly from the 279 for the prior

10-month review, thus indicating a more concerted effort on the part of the

agencies to fulfill their responsibilities under CRA. Secondly, OIRA has

become more involved and conducted the follow-up contacts with the

agencies after OIRA’s distribution of the initial list.

Sixty-Day Delay and

“Good Cause”

Some agencies failed to delay the effective date of some major rules for 60

days as required by section 801(a)(3)(A) of the Act. At the time of my prior

testimony, the effective date of eight major rules had not been delayed.

Page 3 GAO/T-OGC-98-55
Agencies were not budgeting enough time into their regulatory timetable

to allow for the delay and were misinterpreting the “good cause” exception

to the 60-day delay period found in section 808(2).

Section 808(2) states that, notwithstanding section 801, “any rule which an

agency for good cause finds (and incorporates the finding and a brief

statement of reasons therefor in the rule issued) that notice and public

procedure thereon are impracticable, unnecessary, or contrary to the

public interest” shall take effect at such time as the federal agency

promulgating the rule determines. This language mirrors the exception in

the Administrative Procedure Act (APA) to the requirement for notice and

comment in rulemaking. 5 U.S.C. § 553(b)(3)(B). In our opinion, the “good

cause” exception is only available if a notice of proposed rulemaking was

not published and public comments were not received. Many agencies,

following a notice of proposed rulemaking, have stated in the preamble to

the final major rule that “good cause” existed for not providing the 60-day

delay. Examples of reasons cited for the “good cause” exception include

(1) that Congress was not in session and thus could not act on the rule,

(2) that a delay would result in a loss of savings that the rule would

produce, or (3) that there was a statutorily mandated effective date.

The former administrator of OIRA disagreed with our interpretation of the

statutory “good cause” exception. She believed that this interpretation

would result in less public participation in rulemaking because agencies

would forgo issuing a notice of proposed rulemaking and receipt of public

comments in order to invoke the CRA “good cause” exception. OIRA

contends that the proper interpretation of “good cause” should be the

standard employed for invoking section 553(d)(3) of the APA, “as otherwise

provided by the agency for good cause found and published with the rule,”

for avoiding the 30-day delay in a rule’s effective date required under the

APA.

Since CRA’s section 808(2) mirrors the language in section 553(b)(B), not

section 553(d)(3), it is clear that the drafters intended the “good cause”

exception to be invoked only when there has not been a notice of

proposed rulemaking and comments received.

In the last 3 months, our Office has not reviewed a major rule that did not

properly comply with the 60-day delay requirement. Also, the “good cause”

exception has been properly employed in those instances where no notice

of proposed rulemaking was issued or comments received. Finally,

agencies are alerting the public, in the final rule publication in the Federal

Page 4 GAO/T-OGC-98-55
Register, that the 60-day effective date stated in the rule may be delayed

due to the need to comply with the CRA. The Health Care Financing

Administration (HCFA) of the Department of Health and Human Services, in

a recent Medicare rule, contained such a notice, and since HCFA’s

submission of the rule was 5 days later than the publication of the rule in

the Federal Register, the effective date was delayed in accordance with the

CRA.

Definitions of Rules

and Major Rules

One early question about implementation of CRA was whether executive

agencies or OIRA would attempt to avoid designating rules as major and

thereby avoid GAO’s review and the 60-day delay in the effective date. While

we are unaware of any rule that OIRA deliberately misclassified to avoid the

major rule designation, mistakes have been made in major rule

classifications. Also, the failure of agencies to identify some issuances as

“rules” at all has meant that some major rules have not been identified.

CRA contains a broad definition of “rule,” including more than the usual

“notice and comment” rulemakings under the Administrative Procedure

Act which are published in the Federal Register. “Rule” means the whole

or part of an agency statement of general applicability and future effect

designed to implement, interpret, or prescribe law or policy.

Recently, we compared an OIRA-prepared list of important final rules that it

reviewed during the first year of the CRA to the list of rules that OIRA and

the agencies had identified to us as major during the same period. We

found that 12 rules on our list of major rules were not on OIRA’s list. OIRA

officials said that, in retrospect, they and the agencies should not have

identified 7 of those 12 rules as major. The OIRA list also contained 8 rules

that were not on our list of 122 major rules. Of these, OIRA officials said

that all eight should have been identified and submitted to us as major

rules. OIRA officials noted that all of these rules were issued in the first year

of the congressional review process, and that they and the agencies were

still learning how to respond to the statutory requirements. We are

currently following up with OIRA and the agencies that issued these rules to

determine whether they should be added to or subtracted from our list of

major rules.

As I noted in my prior testimony, on occasion, our Office has been asked

whether certain agency action, issuance, or policy constitutes a “rule”

under CRA such that it would not take effect unless submitted to our Office

and the Congress in accordance with CRA. For example, in response to a

Page 5 GAO/T-OGC-98-55
request from the Chairman of the Subcommittee on Forests and Public

Land Management, Senate Committee on Energy and Resources, we

concluded that a memorandum issued by the Secretary of Agriculture in

connection with the Emergency Salvage Timber Sale Program constituted

a “rule” under CRA and should have been submitted to the Houses of

Congress and GAO before it could become effective.

Likewise, we concluded that the Tongass National Forest Land and

Resource Management Plan issued by the United States Forest Service

was a “rule” under CRA and should have been submitted for congressional

review. There are 123 forest plans covering all 155 forests in the National

Forest System. Each plan must be revised and reissued every 10 years.

OIRA stated that, if the plan was a rule, it would be a major rule. In

testimony before the Senate Committee on Energy and Natural Resources

and the House Committee on Resources regarding the Tongass Plan, the

Administrator of OIRA stated that, as was the practice under the APA, each

agency made its own determination of what constituted a rule under CRA

and by implication, OIRA was not involved in these determinations.

We continue to believe that for CRA to achieve what the Congress intended,

OIRA must assume a more active role in guiding or overseeing these types

of agency decisions. Other than an initial memorandum following the

enactment of CRA, we are unaware of any further OIRA guidance. Because

each agency or commission issues many manuals, documents, and

directives which could be considered “rules” and these items are not

collected in a single document or repository such as the Federal Register,

it is difficult to ascertain if agencies are fully complying with CRA.

We note certain congressional committees are taking an active role in

overseeing agency compliance with the CRA. For example, the Joint

Committee on Taxation has corresponded with the Internal Revenue

Service (IRS) as to what should be submitted. Therefore, IRS procedures,

rulings, regulations, notices, and announcements are forwarded as CRA

submittals. Also, in response to the request of the House Committee on

Education and the Workforce, the Departments of Labor and Education

deliver their CRA submissions with a monthly summary directly to the

Committee, in addition to our Office and both Houses of Congress as

required by the CRA.

Page 6 GAO/T-OGC-98-55
Database

Enhancement

As we discussed at your March hearing, we have attempted to work with

executive agencies to get more substantive information about the rules

and to get such information supplied in a manner that would enable quick

assimilation into our database. An expansion of our database could make

it more useful not only to GAO for its use in supporting congressional

oversight work, but directly to the Congress and to the public.

In the initial development of the questionnaire, we consulted with

executive branch officials to insure that the requested information would

not be unnecessarily burdensome. We circulated the questionnaire for

comment to 20 agency officials with substantial involvement in the

regulatory process, including officials from OIRA. The Administrator of OIRA

submitted a response in her capacity as Chair of the Regulatory Working

Group, consolidating comments from all the agencies represented in that

group. It was the position of the group that the completion of this

questionnaire for each of the 4,000 to 5,000 rules filed each year is too

burdensome for the agencies concerned.

On April 22 of this year we again contacted OIRA officials with a modified

version of our questionnaire, which we believed addressed the major

concerns raised with the initial version. We have subsequently met with

officials from OIRA and a select group of executive agency officials, at their

request, to explore additional ways to capture the information. We are

currently reviewing an alternative, but we believe inadequate, version of

the questionnaire proposed by those officials and will meet next week to

continue negotiations on this matter.

We continue to believe that it would further the purpose of CRA for a

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

Members of Congress and the public and to contain as much information

as possible concerning the content and issuance of the rules. We believe

that further talks with the executive branch, led by OIRA, can be productive

and that there may be alternative approaches that address both

congressional and executive branch concerns.

Conclusion CRA gives the Congress an important tool to use in monitoring the

regulatory process, and we believe that the effectiveness of that tool can

be enhanced. Executive Order 12866 requires that OIRA, among other

things, provide meaningful guidance and oversight so that each agency’s

regulatory actions are consistent with applicable law. After 2 years’

experience in carrying out our responsibilities under the Act, we can

Page 7 GAO/T-OGC-98-55
suggest several areas in which OIRA should exercise more leadership

within the executive branch regulatory community, consistent with the

intent of the Executive Order, to enhance CRA’s effectiveness and its value

to the Congress and the public. We believe that OIRA should:

• develop a standardized reporting format that can readily be incorporated

into GAO’s database providing the information of most use to the Congress,

the public, and GAO;

• establish a system to monitor compliance with the filing requirement on an

ongoing basis; and

• provide clarifying guidance as to what is a rule that is subject to CRA and

oversee the process of identifying such rules.

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

be happy to answer any questions you may have.

(996216) Page 8 GAO/T-OGC-98-55
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 37050

Washington, DC 20013

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 (202) 512-6061, or TDD (202) 512-2537.

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