Federal Rulemaking: Agencies Could Take Additional Steps to Respond to Public Comments
Published: 2012-12-20T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Agencies publish thousands of rules each year, with significant benefits and costs. Before issuing a final rule, agencies are generally required to publish an NPRM in the Federal Register. Agencies must then respond to public comments when issuing final rules. Agencies may use exceptions in certain circumstances to forgo this NPRM process to expedite rulemaking. The Office of Management and Budget (OMB) has authority to provide guidance on regulatory issues. GAO was asked to provide information on the rulemaking process. This report addresses (1) how often agencies issued final rules without an NPRM; (2) which exceptions agencies used to do this; and (3) whether agencies took certain actions when issuing major rules without an NPRM, including voluntarily requesting and responding to public comments. GAO reviewed a generalizable random sample of 1,338 final rules published during calendar years 2003 through 2010. The sample contained rules by 52 agencies, including all cabinet departments issuing regulations. GAO completed more detailed analyses of 123 major rules without an NPRM, including every such rule published from 2007 through 2010, to obtain additional information to answer the objectives.
section_title: What GAO Found
paragraphs: Agencies did not publish a notice of proposed rulemaking (NPRM), enabling the public to comment on a proposed rule, for about 35 percent of major rules and about 44 percent of nonmajor rules published during 2003 through 2010. A major rule has significant economic impact and may, for example, have an annual effect on the economy of $100 million or more. Agencies published a total of 568 major rules from 2003 through 2010. Agencies also published about 30,000 nonmajor rules during this period, which have less economic significance and can involve routine administrative issues.
Agencies frequently cited the "good cause" exception and other statutory exceptions for publishing final rules without an NPRM. Agencies in GAO's sample used the "good cause" exception for 77 percent of major rules and 61 percent of nonmajor rules published without an NPRM. Agencies may use the good cause exception when they find that notice and comment procedures are "impracticable, unnecessary, or contrary to the public interest." In practice, agencies may find an NPRM "impracticable" when the rule must be issued by a statutory deadline, "unnecessary" when the rule pertains to technical corrections, and "contrary to the public interest" in an emergency situation. To a lesser extent, agencies also used other statutory exceptions to issue a rule without an NPRM. For example, in 84 of the 123 major rules that GAO analyzed, agencies described circumstances in which a statute: (1) either required or authorized them to issue the rule without an NPRM, (2) prescribed the content of the rule, or (3) set a deadline for a rule or program which the agency stated did not allow sufficient time to issue an NPRM.
GAO found that agencies, though not required, often requested comments on major final rules issued without an NPRM, but they did not always respond to the comments received. Agencies may solicit comments through the Federal Register when publishing a final rule without an NPRM, but the public does not have an opportunity to comment before the rule's issuance, nor is the agency obligated to respond to comments it has received. For example, agencies requested comments on 77 of the 123 major rules issued without an NPRM in GAO's sample. The agencies did not issue a follow-up rule or respond to comments on 26 of these 77 rules. This is a missed opportunity, because GAO found that when agencies did respond to public comments they often made changes to improve the rules. In addition, each of these 26 rules is economically significant and some of these rules have an impact of a billion dollars a year or more. These rules also cover important issues ranging from national health care policies to manufacturing incentive programs. For example, in one of the 26 rules, an agency defined a pre-existing condition to implement the Patient Protection and Affordable Care Act and sought public comment. The agency received 4,627 comments, but has not published a response to them. When agencies do not respond to comments requested, the public does not know whether the agency considered their comments, or if it intends to change the rule. As the courts have recognized, the opportunity to comment is meaningless unless the agency responds to significant points raised by the public.
section_title: What GAO Recommends
paragraphs: GAO recommends that OMB issue guidance to encourage agencies to respond to comments on final major rules, for which the agency has discretion, that are issued without a prior NPRM. OMB disagreed that guidance would offer substantial benefits. GAO believes the recommendation remains valid, as further discussed in the report.

section_title: Letter
paragraphs: Agencies publish on average 3,000 to 4,000 final regulations each year to  achieve goals such as ensuring the safety of food and products,  controlling environmental pollution, and providing oversight of financial  institutions and markets. Regulation is one of the primary tools federal  agencies use to implement and enforce U.S. laws. Agencies also use  regulations to implement programs that provide federal assistance,  grants, and other subsidies. The total costs of these regulations are  estimated to be in the hundreds of billions of dollars, and the estimated  benefits are even higher. Given the significant costs and benefits of  regulations, Congress and the President have focused considerable  attention on the rulemaking process, especially in recent years, and  lawmakers continue to consider legislative proposals to amend the  process.
The basic process by which agencies develop and issue regulations is   APA generally  spelled out in the Administrative Procedure Act (APA).requires agencies to (1) publish a notice of proposed rulemaking (NPRM)  in the Federal Register; (2) allow interested persons an opportunity to  comment on the rulemaking process by providing “written data, views, or  arguments;” (3) issue a final rule accompanied by a statement of its basis  and purpose (including the agency’s response to comments received on  the NPRM); and (4) publish the final rule at least 30 days before it  becomes effective. This process, referred to as notice-and-comment  rulemaking, gives the public an opportunity to provide information to  agencies on the potential effects of a rule or to suggest alternatives for  agencies to consider. The benefits of public participation in notice-and- comment rulemaking have been cited by the courts and others to include:  generating higher quality rules; ensuring the fair treatment of persons  affected by the rules, since all parties potentially affected have a chance  to participate; and promoting the political accountability of the agency by  giving affected parties the ability to comment at an early stage and having  a public record of the agency’s response to those comments.
Prior notice and public comment is not always required, however.  Congress sometimes enacts laws that direct an agency to issue rules  without notice and comment. In addition, APA recognizes that there are  circumstances, such as responding to an emergency situation like a  natural disaster, when providing for notice and comment might not be  appropriate before issuing a final rule, because expediting the rulemaking  process is important to the efficiency and effectiveness of agencies’  activities. Therefore, APA allows agencies to issue final rules without the  use of an NPRM in certain cases, including when the agency determines  for “good cause” that notice and comment procedures are “impracticable,   Agencies often invoke  unnecessary, or contrary to the public interest.” “good cause,” for example, when Congress prescribes the content of a  rule by law, such that prior notice and public comment could not influence  the agency’s action and would serve no useful function.
5 U.S.C. § 553(b)(B).
In order to retain the benefits of public participation that may be lost when  issuing rules without an NPRM, agencies sometimes solicit public  comments on such rules, though not required to do so. If an agency  solicits comments in these cases, the public’s opportunity to comment  does not occur in advance of the rule’s issuance or, in some cases, the  effective date for complying with the rule’s provisions. One common type  of rule often issued without an NPRM is the interim final rule, which  generally is effective immediately but provides an opportunity for public  comment after the rule’s issuance. Also, while agencies are required to  respond to comments received on rules issued with an NPRM when  those rules are finalized, they have no obligation to respond to comments  received on final rules issued without an NPRM.
In 1998, we examined agencies’ publication of rules without an NPRM.  We found that 18 percent (11 of the 61) of the final major rules  and an  estimated 51 percent of all rules published during 1997 had been issued  without an NPRM, often because agencies invoked the good cause  exception.
You asked us to provide information on the frequency, reasons, and  potential effects of issuing final rules without an NPRM, and whether  these have changed over time. This report addresses the following  objectives for final rules published during calendar years 2003 through  2010:  1.  Identify how often agencies issued final rules, including interim rules,  without an NPRM, whether this changed over time, and which  agencies most often issued such rules.  2.  Identify which exceptions to the requirement for an NPRM agencies  used when issuing such rules. 3.  Assess whether agencies, when issuing final major rules without an  NPRM (a) provided information on the rule’s economic effects, (b)  solicited public comments, and (c) responded to public comments.
To address each of these objectives, we used the Government Printing  Office’s (GPO) Federal Digital System database on the Federal Register  to compile a list of final rules issued during calendar years 2003 through  2010 from which we drew a sample for our analysis. We selected a  generalizable stratified random sample of 1,338 final rules published  during the 8-year period. Our sample included all major rules (those that  have a significant economic effect) issued during calendar years 2007  through 2010, a random sample of major rules published from 2003  through 2006, and a random sample of nonmajor rules published from  2003 through 2010. The sample contained rules by 52 different agencies,  including every cabinet-level agency issuing regulations and every  agency that published a major rule during the 8-year period.
We supplemented information from GPO’s Federal Register database  with information from our database on rules submitted to us under the  Congressional Review Act (CRA).databases used to generate our list of all final rules by reviewing related  documentation, interviewing knowledgeable agency officials, testing for  missing data, and tracing a sample of entries to source documents. We  concluded that the data were sufficiently reliable for our purposes.
We tested the reliability of the  To address the first two objectives, we reviewed the published text of all  final rules in our sample to determine if they had been issued in whole or  in part without an NPRM (referred to in this report simply as rules without  an NPRM) and to identify which exceptions agencies cited when issuing  those rules. To address our third objective we focused primarily on  whether agencies issuing major rules without an NPRM: (1) provided  information on the economic effects of the rules, (2) solicited public  comments, and (3) had responded to comments received on major rules  without an NPRM by June 30, 2012.
We completed additional content analyses of the 123 major rules without  an NPRM that we identified in our sample to obtain more detailed  information on the reasons behind agencies’ use of exceptions to an  NPRM, how agencies described the economic effects of rules, and  whether they solicited and responded to public comments. These 123  rules included all major rules without an NPRM from 2007 through 2010  and a sample of major rules from 2003 through 2006. Results of these  content analyses are not generalizable to the entire population of rules;  they only represent the facts and circumstances of the specific rules we  reviewed.
We also met with officials from the Office of Management and Budget  (OMB) and the Administrative Conference of the United States (ACUS)  who are knowledgeable about federal regulatory and administrative law  procedures. We reviewed ACUS recommendations and OMB guidance  to executive agencies on the regulatory process. We did not assess the  agencies’ decisions regarding claims of good cause and other exceptions  or their determinations regarding the effects of their rules. Instead, we are  providing information about what the agencies published in the Federal  Register as the basis for their findings. Detailed information on our scope  and methodology is included in Appendix I.
We conducted this performance audit from June 2011 to December 2012  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: APA outlines the process for informal rulemaking, commonly referred to  as notice-and-comment rulemaking. APA includes six broad categorical  exceptions to this process, including, for example, rules dealing with  agency organization and procedure (see sidebar).
5 U.S.C. § 553(b)(B). Agencies may also find “good cause” to exempt a rule from APA’s  requirement for a 30-day delay of effective date. 5 U.S.C. § 553(d)(3). However, agencies’  use of that good cause exception was not within the scope of this review. circumstances presented in the rules. In other cases, statutes, such as  the 2008 Farm Bill, have authorized or required agencies to issue rules  without notice and comment.exceptions they are not required to request comments from the public or  conduct certain regulatory analyses.
When agencies invoke any of these  CRA, which applies to all agencies, distinguishes between two types of  rules, major and nonmajor. CRA defines a “major” rule as one that,  among other things, has resulted in or is likely to result in an annual effect  on the economy of $100 million or more. Throughout this report, we  present results using the CRA distinction between major and nonmajor  rules. The Office of Information and Regulatory Affairs (OIRA) within OMB  is responsible for determining whether a rule is major.
OIRA also is responsible for providing meaningful guidance and oversight  so that each agency’s regulations are consistent with applicable law, the  President’s priorities, and the principles set forth in executive orders, and  that decisions made by one agency do not conflict with the policies or  actions taken or planned by another agency. Under Executive Order  12866 (reaffirmed by Executive Order 13563), OIRA reviews significant  proposed and final rules from agencies, other than independent  regulatory agencies, before they are published in the Federal Register.  OIRA also provides guidance to agencies on regulatory requirements. For  example, on August 15, 2011, OIRA issued a primer instructing agencies  how best to conduct a regulatory impact analysis. In addition to OIRA’s  previously mentioned responsibilities, according to Executive Order  12866, OIRA is to be the “repository of expertise concerning regulatory  issues.” Executive Order 12866, other executive orders, and OIRA  guidance have all reiterated the importance of public participation and  regulatory analysis in rulemaking.
section_title: Agencies Issued about 35 Percent of Major Rules and about 44 Percent of Nonmajor Rules without an NPRM from 2003 to 2010
paragraphs: During calendar years 2003 through 2010, agencies published 568 major  rules and about 30,000 nonmajor rules. As shown in figure 1, agencies  published about 35 percent of major rules and about 44 percent of  nonmajor rules without an NPRM during those years.
Examples of major rules without an NPRM include a May 2010  Department of the Treasury final rule prohibiting certain consumer credit  practices, for which the agency invoked the good cause exception, and a  September 2008 Department of Health and Human Services (HHS)  notice that announced Medicare cost-sharing amounts, for which the  agency cited an exception in the Social Security Act and good cause.As we observed in our 1998 report, many nonmajor rules without an  NPRM appeared to involve routine, administrative, or technical issues.
Similar examples of nonmajor rules without an NPRM that we identified  during this review included a January 2007 Department of Homeland  Security (DHS) temporary final rule changing drawbridge operation hours  for certain bridges in Florida, and a July 2009 Federal Election  Commission rule allowing a committee that is being audited by the  Commission to have a hearing prior to the Commission’s adoption of a  final audit report.
As illustrated in figure 2, the percentage of nonmajor final rules without an  NPRM was very consistent across the 8-year period we reviewed; varying  only slightly among individual years, but the percentage of major rules  without an NPRM was less consistent. In particular, from 2008 to 2009,  the percentage of major rules without an NPRM increased from 26  percent to 40 percent. Agencies issued the largest numbers of major  rules without an NPRM in 2009 and 2010 (34 in each year), though the  percentage was higher in 2009 than in 2010. (See app. II for more  detailed results of the analyses we conducted during this review,  including numbers, percentages, and confidence intervals.)
Two agencies, HHS and the Department of Agriculture (USDA), published  62 (plus or minus 11) percent of major rules in our sample without an  NPRM, as shown in figure 3. Other agencies accounted for much lower  percentages of the total, all 7 percent or less. The Environmental  Protection Agency (EPA) issued 30 major rules from 2003 through 2010,  but none of these were issued without an NPRM. For the nonmajor  rules, the Department of Transportation (DOT), Department of  Commerce, DHS, and EPA together accounted for almost two-thirds of  nonmajor rules without an NPRM.  All other agencies accounted for 7  percent or less of the total.
The agencies that published rules in our sample used interim rulemaking  for a substantial portion of final major rules without an NPRM. As noted  earlier, an interim rule becomes effective without an NPRM, but the public  generally may provide comments after the rule’s issuance. Across the 8- year time period, agencies issued 47 percent of all major final rules and 8  percent of all nonmajor rules without an NPRM as interim rules. The  percentage of major rules without an NPRM that used interim rulemaking  increased from 2007 through 2010 but was more variable for nonmajor  rules (see fig. 4). Appendix III provides more information on the frequency  of agencies’ use of interim rulemaking in general.
Across the 554 rules in our sample without an NPRM, agencies used 109  distinct terms, many of which had only slight wording variations within a  broad category, to identify the rulemaking action. The majority of these  terms were variations of five broad categories: final rules, interim rules,  temporary rules, direct final rules, and notices. In practice, however, there  may be little distinction between interim rules and certain other rules  without an NPRM that were described using different terminology. For  example, a “final rule, request for comments” and an “interim rule with  request for comments” both provide an opportunity for the public to  comment only after the rule has been published; these rules are in  essence the same type of rule. As a result of the inconsistent terminology,  it would be difficult for Congress to enact legislation on, or for the public to  easily identify, rules without an NPRM based on what agencies call those  rules. For example, in legislation to revise rulemaking procedures being  considered by the 112th Congress, certain provisions would apply when  agencies, for good cause, issue “interim rules.” If the intent is to address  all rules using the good cause exception, this proposed legislation would  not achieve that goal since our analysis showed that not all rules for  which agencies claimed good cause were called “interim rules.” To  facilitate public participation in the rulemaking process, OMB officials told  us that they are working with the Office of the Federal Register to  standardize terminology for agencies to use when publishing rules in the  Federal Register.
section_title: Agencies Most Often Invoked the Good Cause Exception When Publishing Rules without an NPRM
subsections: section_title: Good Cause Exception Commonly Used
paragraphs: The agencies that published rules in our sample claimed the good cause  exception in 77 (plus or minus 11) percent of major rules and 61 (plus or  minus 10) percent of nonmajor rules without an NPRM, as shown in figure  5 below.
74 Fed. Reg. 20,210 (May 1, 2009).  75 Fed. Reg. 69,348 (Nov. 12, 2010). federal waters.Deepwater Horizon oil spill in the Gulf of Mexico on April 20, 2010.
The department published this rule in light of the  For the rules in our sample, agencies most often said that issuing an  NPRM would be contrary to the public interest, but they also frequently  cited multiple grounds for invoking the good cause exception (see table  1). They cited multiple reasons more often for major rules than for  nonmajor rules—63 (plus or minus 14) percent of major rules and 44  (plus or minus) percent of the nonmajor rules.
Ninety-two of the 123 major rules without an NPRM in our sample  invoked the good cause exception. In examining these 92 rules we  identified five primary categories of explanations (more than one category  sometimes applies to a given rule): a law imposed a deadline either requiring the agency to issue a rule or  requiring a program to be implemented by a date that agencies  claimed would provide insufficient time to provide prior notice and  comment—36 rules; a law prescribed the content of the rule issued—31 rules;  the agency said it was responding to an emergency—19 rules;  the rule implemented technical changes—5 rules; and all other explanations (for example, an agency issued a final rule  without an NPRM in response to a court decision)—14 rules.
section_title: Agencies’ Use of Exceptions in Statutes Other than APA
paragraphs: After good cause, agencies most often cited specific exceptions in  statutes other than APA. Such exceptions were cited in 9 (plus or minus  4) percent of nonmajor rules and in 34 (plus or minus13) percent of all  major rules without an NPRM. More specifically, in 38 of the 123 major  rules in our sample, we identified 18 different statutory authorities that  either required or authorized agencies to issue rules without notice and  comment. For example, the 2008 Farm Bill required the issuance of final  rules to implement provisions of the law without prior notice and  comment. HHS, the Department of Labor (DOL), and the Department of  the Treasury issued several joint rules to implement provisions in the  Patient Protection and Affordable Care Act as interim rules. In another  type of example, a provision of the Social Security Act provides an  exception to notice-and-comment rulemaking when a statute establishes  a specific deadline for implementation of a rule and the deadline is less  than 150 days after its enactment. This provision allowed HHS to issue  several Medicare rules without an NPRM because the Medicare  Prescription Drug, Improvement, and Modernization Act of 2003 required  some rules to be issued within shorter time frames than 150 days. Table  2 provides additional information on all of the statutory exceptions that  agencies cited for major rules in our sample.
As mentioned earlier, in addition to the good cause exception, APA  includes six broad categorical exceptions to notice-and-comment  rulemaking. Agencies that published rules in our sample invoked these  broad categorical exceptions infrequently. They did so in 11 (plus or  minus 5) percent of nonmajor rules (most often for rules of agency  organization, procedure, or practice), and in 8 (plus or minus 11) percent  of major rules (most often citing the exception for rules on public property,  loans, grants, benefits, or contracts). These exceptions were cited in 8 of  the 123 major rules without an NPRM in our sample. The following are  examples of rules in which agencies cited the six APA categorical  exceptions:
Military and foreign affairs—cited by a Department of Commerce 2007  final rule that made several corrections to the Export Administration  Regulations regarding Libya and terrorist-supporting countries.
Agency management or personnel—cited by a General Services  Administration 2005 rule regarding the Federal Travel Regulation to  clarify various provisions on temporary duty travel.
Public property, loans, grants, benefits, or contracts—cited by the  Board of Directors of the HOPE for Homeowners Program in a rule  establishing a temporary Federal Housing Administration program  providing mortgage insurance for refinanced loans made to avoid  foreclosure.
Interpretative rules—cited by a DOL 2008 rule revising regulations  implementing the nondiscrimination and affirmative action provisions  of the Vietnam Era Veterans’ Readjustment Assistance Act of 1974,  as amended.interpretation of a mandatory job listing requirement.
According to DOL, it published this rule to codify its
General statements of policy—cited by an HHS 2010 rule revising  standard federal rates and the extension of wage indexes under the  Patient Protection and Affordable Care Act for Medicare payments in  conformance with congressional policy.
Agency organization, procedure, or practice—cited by a DOL 2007  rule amending Occupational Safety and Health Administration  procedures for handling retaliation complaints.
In sum, our review of reasons agencies gave for issuing major rules in our  sample without an NPRM showed that they cited grounds relating to  statutes for most of the 123 rules we analyzed. Specifically, we found that  in 84 of the 123 major rules without an NPRM in our sample, agencies  described circumstances in which a statute: (1) required or authorized  them to issue the rule without an NPRM, (2) prescribed the content of the  rule, or (3) set a deadline for a rule or program which the agency stated  did not allow sufficient time to issue an NPRM. About 70 percent of the  123 major rules in our sample involved, at least in part, the distribution of  federal payments to the public, such as disaster assistance and  reimbursement for health care costs. By foregoing notice and comment in  these cases, agencies expedited the flow of funds to beneficiaries.
section_title: When Agencies Publish Major Rules without an NPRM, They Often Provide Information on Economic Effects and Request Comments, But Do Not Always Respond to Comments
subsections: section_title: Agencies Provided Information on Economic Effects of Most Major Rules without an NPRM
paragraphs: Of the 123 major rules without an NPRM that we reviewed, 113 provided  some estimates of economic effects, such as on the potential costs or  benefits. Agencies do this because Executive Order 12866 directs non- independent regulatory agencies to assess economic effects, including  costs and benefits for all significant rules, whether or not those rules are  issued with an NPRM.requirements of the Executive Order apply only “as practicable.” Of the  remaining 10 of the 123 rules that we sampled, 5 provided some  economic information but did not include estimates of the costs or  benefits, and 5 were issued by independent agencies which are not  required to comply with the Executive Order.
However, according to OMB officials, the  Costs and benefits include both quantifiable measures as well as  qualitative effects that may be difficult to quantify. The information  provided on costs and benefits in the 123 rules we reviewed varied, and  included both quantitative and qualitative information. Agencies gave  quantitative measures of effects for 104 rules, information on effects for 44 rules included in our sample. Appendix IV  provides summary information about each of the 123 major rules without  an NPRM, including the potential benefits, costs, and other economic  effects identified by the agencies.
Agencies quantified costs for 50 rules, benefits in 10, and transfers in 86. payments in whole or in part. In these cases, agencies typically reported  only the estimated budgetary impacts of transfer payments.
Additionally, rules that have a significant effect on the economy, whether  or not issued with an NPRM, are subject to review by OIRA. Agencies  must submit detailed economic analyses of the costs and benefits of all  reasonably feasible regulatory alternatives to OIRA for review. For 55 of  the 123 major rules we examined, the rule stated that the agency had  considered regulatory alternatives. the Conservation Stewardship Program, USDA identified and provided  analyses on five policy options, as well as the option of no program. Of  the 123 major rules we examined, all but 10 were subject to OIRA review.  The 10 rules not subject to OIRA review were issued by independent  regulatory agencies.
Agencies may have considered alternatives but did not summarize their findings in the  published final rules, so there may be other rules among the 123 for which agencies  considered regulatory alternatives.
section_title: Although Not Required, Agencies Often Requested Comments on Major Final Rules Issued without an NPRM, but Did Not Always Respond to Comments Received
paragraphs: Of the 123 major rules without an NPRM in our sample, we found that  agencies requested comments for 77 rules where they had discretion  over at least part of the regulation’s content. Agencies sometimes solicit  public comments through the Federal Register on such rules, though not  required to do so. If an agency solicits comments in these cases, the  public’s opportunity to comment does not occur in advance of the rule’s  issuance or, in some cases, the effective date for complying with the  rule’s provisions. Major rules in which the agency has some discretion  may benefit from consideration of public comments, because the public  could add value by identifying issues, information, and analyses that the  agency might not have initially considered. However, agencies were not  obligated to respond to comments received on these rules, a key  difference from comments received on proposed rules when those rules  are finalized. In 26 of the 77 rules without an NPRM in our sample where  the agency had discretion, the agency did not publish a follow-up rule or  respond to any comments received (see figure 6).
Typically, agency responses to comments received from the public are  published in the Federal Register when a follow-up rule is issued. We  analyzed each of these 77 major rules to determine whether, by the end  of June 2012, agencies had published a follow-up rule in the Federal  Register and, if so, whether the agencies reported receiving comments  and making changes to the original rules. In 26 of these 77 rules, there  was no follow-up rule. We examined publicly available information and  found that the public submitted comments for at least 15 of these 26 rules  but the agencies did not respond to them. Each of these 26 rules has  significant economic effects, with some of these rules having an impact of  a billion dollars a year or more. These rules also cover important issues  ranging from national health care policies to manufacturing incentive  programs. For example, in one of the 26 rules, an agency defined a pre- existing condition to implement the Patient Protection and Affordable  Care Act, and sought public comment. The agency received 4,627  comments, but has not published a response to them. When agencies  do not publish their response to any comments received, the public  record is incomplete. The public does not know whether the agency  considered the comments, accepted or rejected the views or evidence  presented, or if the agency intends to finalize and potentially change the  rule. As the courts have recognized, the opportunity to comment is  meaningless unless the agency responds to significant points raised by  the public.
We found that when agencies did respond to public comments they often  made changes to the rules. In the 51 major rules without NPRMs in our  sample for which the agencies had discretion and requested comments,  the agencies did issue a follow-up rule, and our analysis of those cases  illustrates the potential benefits of follow-up efforts. The agencies  reported receiving public comments on all but 3 of these 51 major rules,  which indicates that the public usually takes advantage of the opportunity  to comment on rules without an NPRM following publication. In addition, we found that agencies made changes to the text of 31 of the 51 rules,  most often in response to public comments. For example, DHS finalized a  September 2009 interim rule on air cargo screening in August 2011. In  response to public comments, the agency removed two provisions of the  original interim rule regarding air cargo screening requirements. These  changes reduced the costs of the rule. In a similar example, in June 2011,  the Department of the Treasury, DOL, and HHS followed up on a jointly- issued July 2010 rule on group health plans and health insurance  issuers. The agencies stated that the amendments in the subsequent  rule were being made in response to public comments received on the  prior rule and that the primary effect of the amendments was to reduce  the costs of compliance.
Over the years, the Administrative Conference of the United States  (ACUS), an advisory agency in administrative law and procedure, has  also highlighted the potential benefits of following up on final rules issued  without an NPRM. In particular, to ensure public participation and limit  undesirable effects regarding final rules issued without notice and  comment, ACUS recommended that agencies request comments  whenever they invoke the “impracticable” or “contrary to the public  interest” reasons under the good cause exemption and publish a  responsive statement on significant and relevant issues raised by such  comments. ACUS noted that in such cases public comments could provide both useful information to the agency and enhanced public  acceptance of the rule. Although this recommendation has not been  implemented, ACUS continues to support it in an effort to improve  transparency and public participation in rulemaking.
section_title: Conclusions
paragraphs: Agencies issue thousands of final rules each year that affect many  aspects of citizens’ lives. The rulemaking procedures that agencies follow  balance the public’s right to be involved in the rulemaking process against  agencies’ need to carry out their missions in an efficient and effective  manner. When rulemaking is expedited, there is a trade-off between  obtaining the benefits of advanced notice and comment and the goal of  issuing the rule quickly. The consequences of such trade-offs could be  most significant for major rules issued without an NPRM, given their  substantial annual effects on society.
Agencies often lessened this trade-off by requesting public comments on  rules issued without an NPRM for which they had some discretion. This is  a positive practice that promotes the benefits of public participation.  However, if agencies and the public are to fully benefit from the process  of public comments, what matters is not simply providing an opportunity  for comment but also public understanding of whether comments were  considered. For more than a third of the major rules published without an  NPRM between 2003 and 2010 where agencies had discretion and  requested comments, the agencies did not respond to comments  received. Some of these rules related to significant national issues such  as health care. When agencies solicit but leave unclear whether  comments were considered, the public record is incomplete. Though such  follow-up is not required, agencies may be missing an opportunity to fully  obtain for themselves, and provide to the public, the benefits of public  participation. Further, agencies may create the perception that they are  making final decisions about the substance of major rules without  considering data, views, or arguments submitted in public comments. The  benefit of follow-up efforts is demonstrated by our finding that, when  agencies did issue follow-up rules, they often made substantive changes  to the original rules, usually in response to public comments.
section_title: Recommendation for Executive Action
paragraphs: To better balance the benefits of expedited rulemaking procedures with  the benefits of public comments that are typically part of regular notice- and-comment rulemakings, and improve the quality and transparency of  rulemaking records, we recommend that the Director of OMB, in  consultation with the Chairman of ACUS, issue guidance to encourage  agencies to respond to comments on final major rules, for which the  agency has discretion, that are issued without a prior notice of proposed  rulemaking.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Director of OMB and the  Chairman of ACUS for their review and comment. We received written  comments on the draft report from OMB, which are reprinted in Appendix  V. OMB also provided a technical comment which we incorporated as  appropriate. ACUS provided technical comments, which we also  incorporated as appropriate.
OMB disagreed with our recommendation to issue guidance to encourage  agencies to respond to comments on final major rules, for which the  agency has discretion, that are issued without a prior notice of prior  rulemaking. OMB stated that it does not believe it is necessary to issue  guidance on this topic at this time. In its response, OMB reiterated the  value of public participation during the rulemaking process and noted that  it routinely encourages agencies to establish procedures to consider  public comments received on interim final rules. However, OMB believes  that the timing and extent of an agency’s responses is a discretionary  matter that an agency must consider in the context of the nature and  substance of the particular rulemaking, as well as the particular agency’s  resource constraints and competing priorities. OMB further stated that this  case-specific approach is generally appropriate—especially given the  often unique circumstances faced by agencies issuing rules without a  prior notice of proposed rulemaking—and that it is not aware of  compelling evidence that a more general, undiscriminating policy, set out  in guidance, would offer substantial benefits.
We continue to believe that enhanced guidance would improve the quality  and transparency of rulemaking procedures. We recognize the fact that  OMB encourages agencies to establish procedures to consider public  comments but believe that OMB needs to go further to encourage all  agencies to respond to public comments on the record. We believe that  there is compelling evidence that such guidance would offer substantial  benefits. ACUS identified this as an issue of concern in 1995, and our  current review confirmed that agencies still do not always follow up on  rules issued without an NPRM. For more than a third of the major rules  published without an NPRM between 2003 and 2010 where agencies had  discretion and requested comments, we found that the agencies did not  respond to comments received. As our evidence demonstrated, some of  these rules had economic impacts in the billions of dollars, attracted over  4,000 comments, and addressed significant national issues, such as  health care. When it is unclear whether agencies considered comments,  rulemaking is less transparent to the public, and, as courts have  recognized, the opportunity to comment is meaningless unless the  agency responds to significant points raised by the public. Further, we  disagree with OMB’s characterization of the scope of our  recommendation. We are not suggesting an undiscriminating policy,  instead we are recommending that OMB work with ACUS to develop  appropriate guidance. Such guidance could maintain the flexibility for  agencies that OMB believes is necessary. Also, following up on rules  issued without an NPRM is not necessarily resource intensive. For  example, an agency could simply post a summary response to public  comments on regulations.gov.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Director of OMB, the  appropriate congressional committees, and other interested parties. In  addition, the report will be available at no charge on GAO’s website at  http://www.gao.gov.
If you or your staff has any questions concerning this report, please  contact Melissa Emrey-Arras at (617) 788-0534 or  emreyarrasm@gao.gov, or Robert Cramer at (202) 512-7227 or  cramerr@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  Key contributors are listed in Appendix VI.
section_title: Appendix I: Scope and Methodology
paragraphs: For final rules published during calendar years 2003 through 2010, the  objectives of this report were to:  1.  Identify how often agencies issued final rules, including interim rules,  without a notice of proposed rulemaking (NPRM), whether this  changed over time, and which agencies most often issued such rules. 2.  Identify which exceptions agencies used when issuing final rules  without an NPRM.  3.  Assess whether agencies, when issuing final major rules without an  NPRM (a) provided information on the rule’s economic effects, (b)  solicited public comments, and (c) responded to public comments.
To address each of these objectives, we selected and reviewed a  representative sample of final regulatory actions published during  calendar years 2003 through 2010 to estimate the prevalence of certain  characteristics in this population. We used the Government Printing  Office’s (GPO) Federal Digital System database on the Federal Register  to compile a list of 30,583 final regulatory actions published in the Rules  and Regulations section during those years. We defined our units of  analysis as “actions” rather than “final rules,” because not all of the  individual documents published in the Rules and Regulations section of  the Federal Register are rules (e.g., some extended comment periods or  made editorial corrections). Further, one published action may include  multiple rules, and there is no way to determine the total number of rules  published short of reviewing each action. However, for simplicity of  presentation, we use the term “final rules” instead of “final regulatory  actions” throughout this report. We supplemented information from GPO’s  Federal Register database with information from our database on rules  submitted to us under the CRA.used to generate our list of all final rules by reviewing related  documentation, interviewing knowledgeable agency officials, testing for  missing data, and tracing a sample of entries to source documents. We  concluded that the data were sufficiently reliable for our purposes.
We tested the reliability of the databases  From this population of 30,583 final rules published in the Rules and  Regulations section from 2003 through 2010, we selected a  generalizeable stratified sample of 1,311 final rules. To ensure that we  reviewed the rules expected to have the most significant effects, we  selected all major rules, as identified under the CRA for calendar years   The remaining rules during this period were stratified  2007 through 2010. and sampled by year (2007 through 2010) and by whether they contained  the term “interim” in the text of the Federal Register action.included rules for calendar years 2003-2006 in our sample. For this  period, we grouped the rules into three additional strata: major rules,  “interim” rules, and other rules. Table 3 summarizes the population and  sample size by stratum.
Based on this sample, we are able to estimate characteristics of the  population of all final rules published in the Rules and Regulations section  of the Federal Register. To ensure that all the rules expected to have the  most significant effects were reviewed, we also included an additional 27  major rules that were not published in the Rules and Regulations section,  but instead were published as Notices (bringing the total number of rules   For this report, when we present estimates for all  we reviewed to 1,338).major rules, we are projecting to the major rules published in both the  Rules and Regulations section and those published in Notices. All other  estimates presented in this report are estimates of the population of rules  published in the Rules and Regulations section for 2003 through 2010.
Our sample contained rules by 52 different agencies, including every  cabinet-level agency issuing regulations and every agency that published  a major rule during the 8-year period.
Because this is a probability sample, our sample is only one of a large  number of samples that we might have drawn. Since each sample could  have provided different estimates, we express our confidence in the  precision of our particular sample’s results as a 95 percent confidence  interval (for example, plus or minus 7 percentage points). This is the  interval that would contain the actual population value for 95 percent of  the samples we could have drawn.
We reviewed the published text of all selected final rules to determine if  they had been published in whole or in part without NPRMs (referred to in  the rest of this report simply as rules without NPRMs). Our analysis  included rules where only a part of the rule was issued without an NPRM  to ensure that our results reflected all instances when agencies cited an  exception to notice and comment. To address our third objective we  focused primarily on whether agencies issuing major rules without an  NPRM: (a) provided information on the economic effects of the rules, (b)  solicited public comments when issuing final rules without an NPRM, and  (c) responded to comments received on major rules without an NPRM by  June 30, 2012. We used standardized data collection instruments and  applied criteria from the Administrative Procedure Act, Regulatory  Flexibility Act, Unfunded Mandates Act, and Executive Order 12866 to  collect and analyze information to address each key question. If the final  rule in our sample was not itself a rule, but was related to a rulemaking  (e.g., if it extended a comment period) we used the underlying rule to  address our questions if sufficient information was provided to identify the  underlying rule. In addition to using our sample to generate estimates for  the entire population on these objectives, we also did additional content  analyses of the major rules without NPRMs in our sample to help address  the objectives. Unlike the generalizable results from our reviews of the  broader sample of rules, the results of these content analyses are not  generalizable to the entire population. They only represent the facts and  circumstances of the specific rules we reviewed. We also met with  officials from the Office of Management and Budget (OMB) and  Administrative Conference of the United States (ACUS) who are  knowledgeable about federal regulatory and administrative law  procedures.
We did not assess the agencies’ decisions regarding claims of good  cause and other exceptions or their determinations regarding the effects  of their rules; instead, we are providing information about what the  agencies published in the Federal Register as the basis for their findings.  Further, we limited our analysis to only what agencies specifically stated  in Federal Register notices. For example, we counted a particular  exception only if the agency specifically cited it or quoted from part of  APA’s description. We did not assume that an agency meant to claim a  particular exemption based on the general content of the rule. Therefore,  our results may understate the frequency with which APA’s good cause  and categorical exceptions applied.
We conducted this performance audit from June 2011 to December 2012  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Detailed Results of GAO Analyses of Final Rules Issued without an NPRM, 2003 through 2010
paragraphs: Tables 4 and 5 in this appendix provide more detailed information on the  results of various analyses we completed for this report, including the  upper and lower bounds of confidence intervals for estimated values, as  appropriate. Figures 7 through 9 in this appendix provide more detailed  information on how agencies addressed the RFA, UMRA, and Executive  Order 12866, reported by agencies under the Congressional Review Act  (CRA), including confidence intervals for our estimates.
RFA applies to all agencies, but the requirements under RFA to prepare  initial and final regulatory flexibility analyses only apply to rules for which  an agency is required to publish an NPRM. Nevertheless, agencies often  discussed RFA in their rules without NPRMs.
UMRA applies to agencies other than independent regulatory agencies,  and UMRA’s requirements only apply to rules for which an agency  published an NPRM. Nevertheless, agencies often discussed UMRA in  their rules without NPRMs.
Executive Order 12866 procedural and analytical requirements only apply  to significant rules, and the requirement to provide the underlying analysis  of benefits and costs only applies to rules that are economically  significant (generally those with an annual impact of $100 million or  more). The executive order does not apply to independent regulatory  agencies.
section_title: Appendix III: Frequency of Interim Rulemaking, 2003 through 2010
paragraphs: Interim final rules are rules that agencies often, but not always, issue  without an NPRM and provide the public an opportunity to comment after  the rule has taken effect. APA does not address interim rulemaking,  although in 1995, ACUS recommended that agencies adopt a form of  interim rulemaking, and Congress has expressly authorized this  procedure in legislation. In our 1998 report on final actions without  NPRMs, we had estimated that agencies published about 400 interim  final rules per year from 1992 to 1997 (out of approximately 4,000 total  final rules each of those years).
Overall, agencies appeared to use interim rulemaking infrequently.  Between 2003 and 2010, agencies published about 4 (plus or minus 2)  percent of nonmajor rules as interim rules. There was relatively little  variation across the individual years in the percentage of nonmajor interim  rules (see fig. 14). However, for major rules, we found that 15 percent  (actual) of all major rules from 2003 through 2010 were issued as interim  rules. The number of major interim rules increased starting in 2008 and  was highest in 2010, when 23 of 100 major rules were an interim rule or  included an interim rule among other final rules. A few of the cases  involving interim rules that we reviewed (17 of the 120) had prior  proposed rules.
We reviewed a total of 120 interim rules within our sample, 56 of which  were major and 64 nonmajor. Three agencies issued more than half of  the major interim rules we reviewed, with the Department of Health and  Human Services (HHS) accounting for 23 percent, the Department of  Agriculture (USDA) 18 percent, and the Department of Homeland  Security (DHS) 11 percent. All other agencies in our sample accounted  for less than 7 percent each of the total major interim rules we reviewed.  For the nonmajor interim rules, four agencies accounted for  approximately two-thirds of these rules, with USDA accounting for 22  percent, DHS 22 percent, the Department of Defense (DOD) 14 percent,  and HHS 11 percent. All others counted for less than 5 percent each of  the total. There may be other agencies that issued interim rules that did  not appear in our sample. Table 6 provides the detailed results of our  analysis, by time period, with confidence intervals.
There is no general requirement for agencies to finalize interim rules, but  we did a “look forward” analysis for each of the 120 interim rules in our  sample to determine how many of those rules agencies had subsequently  finalized and, if so, whether the agencies reported receiving comments or  making changes to those rules. By the end of June 2012, agencies in our  sample had finalized almost half of the interim rules—29 of the 56 major  interim rules in our sample and 37 of the 64 nonmajor interim rules. It took  these agencies on average 452 days (about 1 year, 3 months) after  publication of the original interim rules to finalize the rules, so agencies  may eventually finalize additional interim rules from our sample. Agencies  in our sample frequently reported receiving comments on and making  changes to interim rules that they finalized, especially in the case of major  interim rules. These agencies received public comments on all but 2 of  the major interim rules that were subsequently finalized. In addition,  agencies in our sample made changes to the text of 15 of the 29 major  interim rules when they were finalized, most often in response to public  comments.
section_title: Appendix IV: Summary Information on Final Major Rules Issued without an NPRM, in Whole or in Part—2003 through 2010
paragraphs: The following tables provide information about each of the 123 major  rules issued without an NPRM from 2003 through 2010 that we reviewed  for this report. Rules for which agencies waived NPRMs for only part of  the rule are designated with (P) where we identify the exceptions to  NPRMs that were cited. The narratives on each rule are summarized  primarily from the relevant major rule reports that we submitted to  Congress under CRA. CRA requires us to report on the issuing agency’s  compliance with procedural steps required by various acts and executive  orders governing the rulemaking process. Links to those reports are  provided in the Rule column. In some cases where the published rule  contained other relevant summary information on estimated economic  effects that was not reflected in the major rule report, we added that  information to the summary. The entries are sorted by agency and  presented chronologically by the published date of the rule. Joint rules  issued by more than one agency are listed at the end of each table.  Because of differences in methods and assumptions (for example,  discount rates, inflation), the agencies’ estimates may not be comparable.
section_title: Appendix V: Comments from the Office of Management and Budget
section_title: Appendix VI: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the individuals named above, Tom Beall, Tim Bober, Sara  Daleski, Janet Dolen, Clifton G. Douglas Jr., Denise Fantone, Rob  Gebhart, Tim Guinane, Lois Hanshaw, Shirley Jones, Andrea Levine,  Donna Miller, Mark Ramage, Beverly Ross, Cynthia Saunders, Wesley  Sholtes, Lou V.B. Smith, Andrew Stephens, and Sabrina Streagle made  key contributions to this report.