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MEMORANDUM OF AGREEMENT 


TREASURY AND OMB IMPLEMENTATION OF 


EXECUTIVE ORDER 12291 


I. 	 General 

Treasury economists will be responsible for: 

(a) 	 Identifying economic issues in Tr'easury regulations. 

(b) 	 Preparing Regulatory Impact Analyses, when required. 

II. Regulations 

Internal Revenue Service 


Bureau of Alcohol, Tobacco and Firearms 


U.S. customs Service 

(a) 	(1) The review procedures of the Executive order are 

waived with respect to all regulations except 

legislative regulations that are •major• as defined 

in the Executive order. 

(2) 	 The procedures specified in section II(c) of this 

agreement do not apply to'major legislative regulations, regulations defined in section l (a) (1 )- (3) 

or subject to section 8 of the Executive order, 

advance notices of proposed rulemaking, regulations 

·which 	are not reviewed or subject to approval by an 

Assistant Secretary prior to issuance, regulations 

concerning the establishment or designation of 

geographical viticultural areas, and technical corrections to previously published regulations. OMB 

may exempt additional regulations or classes of regulations from these procedures. 

(b) Treasury will be responsible for alerting OMB to: 

(1) 	 any major regulation for which Executive order review 

has been waived. 

(2) 	 any non-major regulation that reasonably could be 

expected to have a significant economic impact. 

(c) 	 Prior to publication of a regulation in the Federal 

Register, and at such times as Treasury may determine, 

Treasury will provide to the appropriate OMB desk 

officer three (3) copies of a statement that: . 
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(l) 	Identifies the title of the regulation; 

(2) 	 Indicates the stage of rulemaking; 

(3) 	 Briefly describes what the regulation will require 

and identifies any significant policy changes 

proposed or resulting from the regulation; and 

(4) 	 Indicates the basis for determining that the regulation is not a major regulation or, in the case of 

an interpretative regulation, explains why the regulation is considered interpretative. 

Treasury will not publish any regulation subject to this 

subsection until OMB review has been completed. OMB 

review will be deemed to be completed in 10 calendar 

days (or, if required with respect to a specific regμil.ation, within such lesser time as may be agreed by OMB 

and Treasury) unless, prior to such time, OMB advises 

Treasury that either review has been completed or 

requests, pursuant to subsection II(d), to review the 

regulation under the terms of the Executive Order._ 

(d) 	 OMB reserves the right to review the economic impact of 

any regulation under the terms of the Executive order. 

Requests for such review may be made orally, and shall 

be confirmed in writing by the Administrator or Deputy 

Administrator for Information and Regulatory Affairs. 

Any review under the terms of the Executive order will 

be deemed to be completed 10 calendar days from the date 

OMB received the materials required for review, unless 

prior to such time: 

(1) 	 OMB orally notifies Treasury that review has been 

completed; or 

(2) 	 OMB orally notifies Treasury that it is extending 

review pursuant to section 3(f) of the Executive 

order. Any such notice shall be confirmed in writing by the Administrator or Deputy Administrator for 

Information and Regulatory Affairs. 

Treasury will not publish any such regulation until OMB 

review has been completed under the terms of the 

Executive order. 

Bureau of Public Debt 

The review procedures of the Executive order are waived 

with respect to all circulars and regulations issued by 

the Bureau of Public Debt which implement, through the 

exercise of the general borrowing power, the fiscal 

policies of the United States. 

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• 0 Rulings

Internal Revenue Service 

Bureau of Alcohol, Tobacco and Firearms 

U.S. Customs Service 

(a) 	 The review procedures of the Executive order are waived 

with respect to revenue rulings, revenue procedures, 

Customs decisions, legal determinations, and other 

similar ruling documents. 

(b) 	 Treasury will be responsible for alerting OMB to any 

ruling document that reasonably could be expected to 

have a significant economic impact, particularly 

rulings in which there is a.wide range of options with 

varying degrees of economic impact. 

(c) 	 In accordance with the procedures of section II (d), OMB 

reserves the right to review the economic impact of a 

particular ruling under the terms of the Executive 

order. Treasury will not publish any such ruling until 

OMB review has been completed under the terms of the 

Executive order. 

IV. Effective Date 

These procedures will become effective 30 days after the 

date of this agreement, and will continue for one year or 

until 90 days after either OMB or Treasury notifies the 

other that the agreement is terminated, which ever date is 

later. The Memorandum of Agreement between OMB and 

Treasury, dated April 28, 1982,· shall continue in effect 

until the effective date of this agreement. 

r J, 

eral Counsel Administrator for Information 

Department of the Treasury and Regulatory Affairs 

APR 	 2 ti IS83 DATED: 
DEPARTMENT OF THE TREASURY 

WASHINGTON 

GENERAL COUNSEL November 4, 1993

The Honorable Sally Katzen 

Administrator, Office of Information 

and Regulatory Affairs 

Executive Office of the President 

Office of Management and Budget 

Washington, D.C. 20503 

Dear 	Sally: 

The purpose of this letter is to restate my understanding, 

based on our previous conversations and your October 12 guidance 

memorandum, that E.O. 12866 does not apply to regulatory actions of 

the Department of the Treasury that were not subject to review under 

the terms of E.O. 12291 or the Treasury-OMB memorandum of agreement 

(MOA) implementing that Order. 

E.O. 12291 did not apply to agency regulations "issued with 

respect to a military or foreign affairs function of the United 

States." E.O. 12866 contains a parallel exemption, but specifically 

includes such regulations that involve the "import or export of nondefense articles and services." It is my understanding that this 

limitation on the exemption is not intended to apply to Treasury 

regulations that were not subject to E.O. 12291. Examples of such 

regulations include: 

• 	 Regulations issued by the Office of Foreign Assets Control 

(OFAC) that implement the President's foreign policy by blocking 

assets and imposing economic sanctions on foreign countries. 

Current sanctions programs include Haiti, Iraq, Vietnam, Cuba, 

Iran, Libya, and Yugoslavia (Serbia and Montenegro) . 

• 	 Regulations issued by the Secretary of the Treasury in his 

capacity as Chairman of the Committee on Foreign Investment in 

the United States pursuant to the Defense Production Act of 1950 

(as amended by the Omnibus Trade and Competitiveness Act of 

1988), providing for the national security review of mergers, 

acquisitions and takeovers of U.S. firms by foreign entities. 

• 	 Regulations issued by the Assistant Secretary (Economic Policy) 

concerning the periodic reporting of portfolio capital positions 

and transactions pursuant to the International Investment and 

Trade in Services Survey Act and the Bretton Woods Agreements 

Act, and the reporting of foreign currency positions of large 

U.S. business enterprises and their foreign affiliates pursuant 

to section 5315 of title 31, United States Code. 
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• 	 Customs regulations restricting the importation of particular 

articles. For example, Customs issues regulations to restrict 

the importation of articles based on determinations made by the 

U.S. Information Agency (USIA) under the authority of the Convention on Cultural Property Implementation Act. Recently, such 

regulations have restricted the importation of archaeological 

artifacts from Mali, El Salvador and Guatemala. 

The MOA exempted from E.O. 12291 review (1) all rulings 

documents issued by the Internal Revenue Service (IRS), the Bureau of 

Alcohol, Tobacco and Firearms (BATF), and the U.S. customs Service 

and (2) and specified regulations issued by those bureaus and the 

Bureau of the Public Debt (BPD). Appendix c of your October 12 guidance memorandum, which lists regulations that are not subject to E.O. 

12866 review, includes the ruling documents but omits the regulations 

included in the MOA. We believe this was an oversight and it is my 

understanding that the following continue to be exempt from review 

under E.O. 12866 on the basis of the statement in your memorandum 

that previously granted exemptions remain in effect: 

• 	 BPD regulations that implement, through the exercise of the 

general borrowing power, the fiscal policies of the United 

States. 

• 	 BATF regulations concerning the establishment or designation of 

geographical viticultural areas. 

• 	 IRS, Customs and BATF regulations that are not subject to the 

approval of an Assistant Secretary prior to issuance. For 

example, Customs issues regulations pursuant to certifications 

made by the state Department that grant vessels or aircraft of a 

foreign country reciprocal treatment in the United States when 

the foreign country provides the same treatment to U.S. vessels 

or aircraft; the IRS issues regulations amending the statement 

of Procedural Rules, 26 CFR Part 601. 

• 	 Advance notices of proposed rulemaking (ANPRMs) issued by IRS, 

Customs and BATF. In the past three years, BATF issued three 

ANPRMs and customs issued one, none of which contained proposed 

regulatory text; the IRS did not issue any ANPRMs during this 

period. 

We would be pleased to discuss any of the above referenced 

regulations with you or your staff. 

Hanson 


Counsel 

EXEC UTIVE OFFICE OF T H E PRESI DENT 


OFFICE OF MANAGEMENT AND BUDGET 


WASHI NGT ON, D.C. 20503 


ADM IN ISTRATOR 

OFFICE OF 
 Dl:C 22 ~ INFORMATION AND 


REGULATORY AFFAIRS 


Honorable Jean E. Hanson 

General Counsel 

Department of the Treasury 

Room 300 

Washington, D.C. 20220 

Dear Jean: 

This is in response to your letter of November 4, 1993, 

which discussed the application of Executive Order No. 12866 to 

Treasury regulations. 

You are correct in stating our agreement that the new 

Executive Order does not apply to the substantive categories of 

regulatory actions of the Department of the Treasury that were 

not subject to review under Executive Order 12291 or the 

Treasury/OMB Memorandum of Agreement implementing that Order. 

Please note, however, that the new Executive Order does apply to 

advance notices of proposed rules (ANPRM's) unless an ANPRM falls 

within one of the substantive areas that we have agreed to 

exempt. 

In the enclosed document, we have outlined the substantive 

areas of regulation that we are prepared to add to the "exempt 

list" attached to our October 12 guidance memorandum. All other 

rules should be included on the lists of rules under development 

that is to be submitted periodically to OMB so that we can 

determine which are 11 significant 11 and hence warrant centralized 

review. Simply stated, we are continuing the Treasury 

Department's current exemptions from regulatory review, except 

for ANPRM's. If the nature of Treasury's regulatory issues 

should change, we will consult with you to work out any necessary 

adjustments. 

I want to take this occasion to thank you again for the 

professional and expeditious way your staff has handled 

regulatory issues. I look forward to working with you as we 

implement the new Executive Order. 

Sincerely, 

en Enclosure 
ENCLOSURE 

Treasury Department Regulations Not subject to Review Under E.O. 

12866 as of November 1993 

o 	 Regulations that implement a military and foreign affairs 

function of the United states, including: 

Regulations issued by the Office of Foreign Assets 

Control (OFAC) that implement the President's foreign 

policy by blocking assets and imposing economic 

sanctions on foreign countries. 

Regulations issued by the Secretary of the Treasury in 

his capacity as Chairman of the Committee on Foreign 

Investment in the United States pursuant of the Defense 

Production Act of 1950 (as amended by the Omnibus Trade 

and Competitiveness Act of 1988), providing for the 

national security review of mergers, acquisitions and 

takeovers of U.S. firms by foreign entities. 

Regulations issued by the Assistant Secretary (Economic 

Policy) concerning the periodic reporting of portfolio 

capital positions and transactions pursuant to the 

International Investment and Trade in Services Survey 

Act and the Bretton Woods Agreements Act, and the 

reporting of foreign currency positions of large U.S. 

business enterprises and their foreign affiliates 

pursuant to Section 5315 of title 31, United states 

Code. 

u. s. Customs Service (Customs) regulations restricting 

the importation of particular articles. 

o 	 Bureau of Public Debt (BPD) regulations that implement, 

through the exercise of the general borrowing power, the 

fiscal policies of the United States. 

o 	 Bureau of Alcohol, Tobacco and Firearms (BATF) regulations 

concerning the establishment or designation of geographical 

viticultural areas. 

o 	 Internal Revenue Service (IRS), Customs and BATF regulations 

that are not subject to the approval of an Assistant 

Secretary prior to issuance. 

o 	 Rulings documents issued by the IRS, BATF, and customs.