Federal User Fees: Key Considerations for Designing and Implementing Regulatory Fees
Published: 2015-09-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Regulatory user fees are assessed on certain nonfederal entities subject to regulation in conjunction with regulatory activities. They represent a significant source of federal government revenue—some individual regulatory user fees exceed $1 billion in annual collections—and often support agencies' regulatory missions. Well-designed regulatory user fees can help fund regulatory programs while reducing taxpayer burden.
GAO built on its prior user fee work by assessing what additional design and implementation characteristics exist specifically for regulatory user fees in terms of how these fees are: (1) set, (2) collected, (3) used, and (4) reviewed. To do so, GAO reviewed relevant literature and analyzed 10 regulatory user fees within 6 agencies—Environmental Protection Agency, Food and Drug Administration, National Credit Union Administration (NCUA), Nuclear Regulatory Commission, Office of the Comptroller of the Currency, and Securities and Exchange Commission. GAO selected these agencies based on their high amounts of fee collections and rulemaking activity and diverse fee characteristics. GAO also examined stakeholder views on these selected fees and held a multi-agency panel discussion to ensure the broad applicability of the findings.
section_title: What GAO Found
paragraphs: GAO identified key elements of regulatory user fees for decision makers to consider as they design, implement, and evaluate these fees.
Setting regulatory user fees: Congress determines in statute the degree of flexibility to make fee design and implementation decisions that will be retained or delegated to the agency. This has implications for whether agencies issue regulations to set fees, who will determine the level of regulatory activity, and how costs will be allocated among beneficiaries. In setting fees, agencies typically give special consideration to small businesses' ability to pay.
Collecting regulatory user fees: Regulatory user fees are not always collected at the time of a specific service or transaction. While some regulatory user fees are charged for specific services, many are collected from an entire industry at regular intervals as prescribed by statute or regulation. Collecting fees this way can create a stable revenue stream. Agencies may use different methods to ensure collection of fees because they cannot always withhold services until the fee is paid.
Using regulatory user fees: It is important to consider the availability of fee collections and unobligated balances. In some cases, agencies have the authority to use balances to mitigate revenue instability. In other cases, collected fees are only available to the agencies if Congress appropriates them.
Reviewing regulatory user fees: Regulatory user fee reviews provide important information for decision makers, such as identifying the effects of changes in a regulated industry. The appropriate time frames and methods for agency review will vary by individual circumstances. Regulatory programs produce both public benefits and services to fee payers, so it is important that fee review processes provide opportunities for input from stakeholders, including fee payers and the general public. Agencies can promote transparency by providing information on how fees are calculated and used to address the diverse needs of policymakers, stakeholders, and the general public. Decision makers can help mitigate the appearance that fee-payers have undue influence on regulatory outcomes through appropriate stakeholder involvement and dissemination of information.
section_title: What GAO Recommends
paragraphs: GAO is not making any recommendations in this report. NCUA provided written comments agreeing with GAO's findings. NCUA and three other agencies also provided technical comments, which were incorporated as appropriate.

section_title: Letter
paragraphs: Regulatory user fees provide a significant source of funding for  government regulation, and some exceed $1 billion in annual collections.  Thoughtful design is important to ensure that these fees can be used as  intended to support agencies’ regulatory missions and ensure that every  funding source is carefully assessed. Building on our prior work on user  fees, including Federal User Fees: A Design Guide (User Fee Design  Guide) and Federal User Fees: Fee Design Options and Implications for  Managing Revenue Instability, this report provides key questions for  Congress, agency officials, and oversight bodies to consider when  designing, implementing, and evaluating regulatory user fees (see  appendix I). Because the design of regulatory user fees varies widely  and Congress provides agencies with different degrees of flexibility to  manage them, some of the key questions identified in this report may be  more applicable to certain agencies than others when considering  individual regulatory user fees.
User fees are assessed to users for goods or services provided by the  federal government. User fees generally apply to federal programs or  activities that provide special benefits to identifiable recipients above or  beyond what is normally available to the public. For the purposes of this  report, “regulatory user fees” are defined as a subset of federal user fees  that are charged to regulated entities in conjunction with regulatory  activities. Businesses and individuals pay regulatory user fees when they  undertake certain activities subject to federal government regulation.  These fees are often used to fund regulatory programs. For example, we  consider the fees assessed by financial regulatory agencies and the  Nuclear Regulatory Commission on their regulated industries to be  regulatory user fees. We also consider application fees, such as fees  charged by the Environmental Protection Agency to review applications  for new pesticides, and inspection fees, such as fees charged by the  Animal and Plant Health Inspection Service (APHIS) and U.S. Customs  and Border Protection to people, goods, and means of conveyance  entering the United States, to be regulatory user fees.
By contrast, businesses and individuals pay other types of user fees in  exchange for the receipt of a discrete product or service where the  government is not engaging in a regulatory activity. Examples of other  user fees include entrance fees for national parks and fees paid for the  purchase of certain government publications such as maps.
We prepared this report under the Comptroller General’s authority to  conduct evaluations on his own initiative as part of our continuing efforts  to assist Congress with establishing and updating user fees. Our  objectives were to identify the design and implementation characteristics  of regulatory user fees in terms of how these fees are: (1) set, (2)  collected, (3) used, and (4) reviewed.
To do this work, we examined the characteristics of regulatory user fees  through a literature review, case studies, and a multi-agency panel  discussion. Our literature review included Office of Management and  Budget (OMB) and agency budget documents; Inspectors General,  Congressional Budget Office, and Organisation for Economic Co- operation and Development reports; and our related reports. We also  used the literature review to define and identify regulatory user fees.
For our case studies, we selected 10 regulatory user fees within six  agencies, as shown in table 1. We selected agencies and fees with high  dollar amounts of collections, high amounts of rulemaking activity, and  diverse fee characteristics. For each case study, we reviewed documents  related to the fee and interviewed agency officials about their  management of the fee, including the extent to which they found the User  Fee Design Guide to be applicable to their regulatory user fees. We also  examined stakeholder views on the 10 selected fees by reviewing public  comments on proposed rules in the Federal Register and minutes of  public meetings.
We invited 12 agencies, including the 6 named above, to respond to a  questionnaire and participate in a structured panel discussion. Eleven  agencies completed the questionnaire and 10 attended the panel. In  addition to the 6 agencies named above, the panel consisted of  participants from APHIS, Federal Communications Commission, Federal  Energy Regulatory Commission, and U.S. Patent and Trademark Office.  These agencies were selected based on our prior reviews of regulatory  user fees, as well as large amounts of regulatory user fee collections and  diversity of fiscal and regulatory characteristics. In addition, we met with  OMB staff to supplement information obtained from the case studies,  questionnaire, and panel discussion. The results of the case studies,  questionnaire, and panel discussion cannot be generalized to all  regulatory user fees, but are designed to reflect the broad diversity of  regulatory user fee characteristics. Detailed information on our scope and  methodology is included in appendix II.
We conducted this performance audit from August 2014 through  September 2015 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: In our body of work on federal user fees we have reported on principles  for designing federal user fees and evaluated several individual fees. Our  2008 User Fee Design Guide described principles for setting, collecting,  using, and reviewing federal user fees. That report examined fees using  four criteria: efficiency, equity, revenue adequacy, and administrative  burden. These criteria have often been used to assess user fees and  other government collections such as taxes. We further reported on user  fee design principles in Federal User Fees: Fee Design Options and  Implications for Managing Revenue Instability. That report describes six  key fee design decisions intended to inform congressional design of fees  that strike Congress’s desired balance between agency flexibility and  congressional control. We have also evaluated several individual user  fees, including agricultural quarantine inspection user fees, patent fees,  immigration fees, and air passenger inspection fees.
As we reported in September 2013, user fee designs can vary widely and,  in general, are governed by two authorities: an authority to charge fees  and an authority to use fee collections. Agencies derive their authority to  charge fees either from the Independent Offices Appropriations Act of  1952 (IOAA) or from a specific statutory authority. IOAA gives agencies  the authority to charge fees for a service or thing of value provided by the  agency. Separate authority is needed for an agency to retain and obligate  collected fees. The terms of a specific statute permitting an agency to  charge a fee would determine whether or not the agency can retain and  obligate the collected fees. However, Congress has frequently provided  agencies with statutory authority both to collect fees and to use the  collections. In these specific fee authorities, Congress determines the  degree of flexibility to make fee design and implementation decisions that  will be retained or delegated to the agency. Our September 2013 report  found that in designing individual user fees, Congress can decide among  options to retain its control or increase agency flexibility for various  elements of the fee, including how rates are set, how collections can be  used, and what reporting and oversight is required.
The legal and policy framework governing regulations is also relevant to  the management of regulatory user fees. Specific statutory authority may  grant an agency the authority to issue a regulation which creates rights  and obligations, and addresses other substantive matters in ways that  have the force and effect of law. These regulations are generally  codified in the Code of Federal Regulations. Typically, regulations  require a desired action or prohibit certain actions by regulated parties.  The regulatory process is governed by statutes, executive orders, and  agencies’ policies and procedures that, for example, require agencies to  evaluate the need for regulations, assess the potential effects of new  regulations, and obtain public input (with certain exceptions) during the  development of regulations. OMB is responsible for establishing  government-wide financial management policies, such as OMB Circular  No. A-25, User Charges. OMB is also responsible for ensuring that  federal regulations issued by agencies follow executive order  requirements and guidance.
section_title: Setting Regulatory User Fees: The Amount Set Can Determine the Level of Regulatory Activity
paragraphs: Congress determines in statute the degree of flexibility to make fee  design and implementation decisions that will be retained or delegated to  the agency. This has implications for whether agencies issue regulations  to set fees, who will determine the amount of regulatory activity, and how  costs will be allocated among the various beneficiaries of regulatory  programs, including small entities (see figure 1).
subsections: section_title: The Extent of Agency Discretion to Set Regulatory User Fees Has Implications for Rulemaking
paragraphs: As our prior work found, the degree to which Congress delegates or  retains the authority to set user fees has implications for fee program  management, including agencies’ use of the rulemaking process to set  the fees. When an agency has greater flexibility, the agency typically  sets the fee by regulation; when Congress retains a greater degree of  control, fees are typically set in statute and agencies would not need to  use notice-and-comment rulemaking. The 10 selected regulatory user  fees included in this report exist at varying points along this spectrum.
Examples of How Congress Exercises Control over Regulatory User Fee Setting and  Delegates Authority to Agencies
Congress sets in legislation the amount of the Environmental Protection Agency (EPA)  pesticide registration service fee paid by each user.
Congress set by statute the total amount of tobacco user fees the Food and Drug  Administration (FDA) is authorized to collect each year, and established a formula in  the Tobacco Control Act for allocating the total amount among the tobacco product  classes that FDA regulates.
Congress directs the Securities and Exchange Commission (SEC) in legislation to  collect fees that are designed to recover the costs of SEC’s annual appropriation, and  prescribes a methodology that SEC must use to determine how much each user pays.
Congress directs the Nuclear Regulatory Commission (NRC) in legislation to recover  approximately 90 percent of its annual appropriation through user fees, but the agency  has the authority to allocate the charges among individual users.
Congress provided the National Credit Union Administration (NCUA) and the Office of  the Comptroller of the Currency (OCC) with broad statutory authority to charge fees to  fund their operations. These agencies set the total amount to be collected each year  and establish the fee rates paid by individual users.
Regulatory user fees can be set by notice-and-comment rulemaking or  other mechanisms. The six selected agencies typically use notice-and- comment rulemaking to set regulatory user fee rates or structures in  cases where Congress has authorized them to determine who will pay  what amount. For example, the Clean Air Act, as amended, authorizes  EPA to establish fees to recover the costs of its Motor Vehicle and Engine  Compliance (MVECP) program. EPA uses notice-and-comment  rulemaking to set MVECP fees and make changes to the fee structure.  Similarly, NRC issues annual rulemakings to set the fee rates for its Part  170 fee for regulatory services—which is charged for direct services to  applicants and licensees—and its Part 171 annual fee—which covers  other regulatory costs. NCUA uses notice-and-comment rulemaking to  establish its fee structure and uses memoranda to annually update the  fee rates. In contrast, the six selected agencies typically did not use  notice-and-comment rulemaking in cases where they do not have  discretion to set or change the fee rate, or where a formula for calculating  the fee is set in statute. In these cases, agencies communicate new fee  rates by posting information to their websites, directly contacting fee  payers, or using notices in the Federal Register, among other  mechanisms. For example, within approximately 30 days of receiving its  annual appropriation, SEC publishes a notice in the Federal Register to  communicate the new Section 31 securities transaction fee rates.
section_title: Fee Setting Decisions Can Affect the Level of Regulatory Activity
paragraphs: In setting regulatory user fees, decision makers can be faced with a policy  decision about the scope of the agency’s regulatory activities and the  amount of the fee to be charged. Depending on its decisions, Congress  may choose to provide additional appropriations to the agency. When  regulatory user fees provide funding for an agency or program,  Congress’s or an agency’s fee-setting decisions can affect the frequency,  amount, or timeliness of the agency’s regulatory activity because the total  amount of regulatory user fees can determine the level of service or  regulation that the agency provides. In some cases, such as SEC’s  Section 31 fee, this policy decision is made entirely by Congress because  the total amount of fees to be collected is set by the annual appropriations  process. In other cases, such as NCUA’s operating fee and OCC’s  semiannual assessments, the agencies have broad discretion to set the  amount of fees and use them to fund their regulatory activities. For  example, OCC has statutory authority to collect an assessment, fee, or  other charge from financial institutions as the Comptroller determines is  necessary.
The effects of fee-setting decisions depend on whether the program is  fully or partially funded by user fees. Some programs’ only source of  budgetary resources is the fees they charge. In these cases, regulatory  user fees are often charged to an entire industry to cover the full cost  incurred by the agency to regulate that industry. For example, FDA’s  tobacco user fee is the sole source of funding for the agency’s Center for  Tobacco Products, and it is charged to manufacturers and importers of  tobacco products that are subject to FDA regulation. In other cases,  regulatory user fees can be set to cover the costs of an additional level of  service above and beyond what is funded by the agency’s annual  appropriations. For example, both EPA’s pesticide registration service fee  and FDA’s prescription drug fee may provide additional resources to  supplement annual appropriations and enable faster review of new  pesticide and prescription drug products.
section_title: Regulatory User Fees Balance Public Benefits with Services to Fee Payers
paragraphs: Some agency officials participating in our panel discussion said that their  fee-funded regulatory programs benefit the general public—either directly  or indirectly—such as by protecting public health or economic stability,  but pointed out that fee payers often pass on the cost of regulation to their  customers. Panel participants also said that fee payers can receive  direct services in exchange for paying regulatory user fees, such as a  license or the review of an application. For example, motor vehicle and  engine manufacturers pay EPA’s MVECP user fee in exchange for EPA  assessing whether engines meet emission standards and issuing  certifications. The manufacturers receive an EPA certification that allows  them to sell engines, while the public benefits from cleaner air.
In some cases payers receive the right to engage in a regulated activity or  business. For example, the tobacco manufacturers and importers who  pay FDA’s tobacco user fee can engage in the regulated business. Most  of these user fees, as our prior work found, are spent to promote public  health, such as through public education, regulatory science, product  review, and compliance and enforcement.
The intended benefit of paying a fee can also be a stable financial  environment and consumer confidence. For example, the financial  institutions regulated by NCUA and OCC pay fees for the right to operate  financial institutions, such as credit unions or banks, and they benefit from  the economic stability and consumer confidence that is supported by  regulation of our nation’s financial system.
section_title: Small Entities Are Typically Given Special Consideration
paragraphs: In setting fees, agencies typically give special consideration to small  entities—which consist of small businesses and other small  organizations, such as small banks or certain small educational  institutions that handle nuclear material regulated by NRC. This can be an  equity consideration that takes into account small entities’ ability to pay  the regulatory user fee and compete with larger businesses and  organizations. These considerations can include exemptions or lower fee  amounts. Of the 10 fees we examined, only SEC’s filing fees and Section  31 fees do not have special considerations for small entities. The process  for setting these fees is established by statutory provisions that do not  take into account the size of the payer. Also, Section 31 fees are paid by  national securities exchanges and the Financial Industry Regulatory  Authority (FINRA), none of which is considered to be a small entity under  SEC rules.
In some cases, agencies are required by statute to provide special  consideration for small entities. For example, the Pesticide Registration  Improvement Act of 2003, as amended, provides for fee waivers for small  businesses and for exemptions from fees in certain circumstances based  on factors such as number of employees and volume of revenue.  Further, in our prior work, we found that the Leahy-Smith America Invents  Act required the U.S. Patent and Trademark Office to establish reduced  fee rates for micro entities. In addition, when agencies set their fees by  rulemaking they are required by the Regulatory Flexibility Act to consider  the impact of these proposed regulations on small entities. For example,  EPA regulations provide that an entity may be eligible for a reduced  MVECP fee if the full fee for an application for certification for a model  year exceeds 1 percent of the aggregate projected retail sales prices of  all vehicles or engines covered by a certificate, which is intended to ease  the burden on smaller manufacturers. Additionally, agencies can provide  special considerations for small entities when they are not required to do  so. For example, NCUA and OCC—which have broad authority to set  their fees—take into account the amount of assets held by the financial  institutions that they regulate when setting their fee amounts. As a result  of this fee structure, smaller financial institutions with fewer assets pay a  lower amount than larger ones.
section_title: Collecting Regulatory User Fees: Timing Could Have Management Implications
paragraphs: Regulatory user fees are not always collected at the time of a specific  service or transaction. Rather, many are collected from an entire industry  at regular intervals as prescribed by statute or regulation. There are  management implications for the timing of fee collections, as well as  whether a minimum amount of annual appropriations must be reached  before the fee can be collected (see figure 2).
subsections: section_title: Fees Collected at Regular Intervals Can Cover Broad Costs of Regulation, but May Require Different Internal Controls Than Transactional Fees
paragraphs: Six of our 10 selected regulatory fees are collected at regular intervals  such as quarterly or annually. Unlike transactional fees collected at the  time of an individual transaction, these non-transactional fees include  NCUA’s operating fee, which is collected annually, as well as OCC’s  semiannual assessments and SEC’s Section 31 fee, which are collected  semiannually. Similarly, FDA’s tobacco fee and NRC’s Part 170 fee are  billed quarterly, while NRC’s part 171 fee is billed quarterly or annually.  FDA’s prescription drug user fee includes both transactional charges for  prescription drug applications and non-transactional fees, namely annual  charges for establishments that manufacture prescription drugs and  existing prescription drug products. In contrast to these non-transactional  fees, our prior user fee work, including the User Fee Design Guide,  focused on fees that are collected at the time of transactions for  government goods and services.
Some non-transactional fees are charged to an entire industry at regular  intervals to broadly cover the costs of regulating that industry. In these  cases, the amount of the fee is not calculated based on services provided  to the individual user or the number of transactions by the user. For  example, financial institutions pay fees to NCUA and OCC to cover the  cost of regulation. The amounts collected are in part based on the  amount of assets held by the financial institution, rather than directly tied  to the amount of time or resources the government spends regulating  them. Non-transactional fees can also cover costs the agency incurs in  serving the broader public interest through regulation as well as other  responsibilities not directly associated with services provided to the  regulated parties. For example, FDA’s tobacco fee pays for public  education, such as educating consumers on the danger of tobacco  products, as well as the agency’s regulation of these products. Other non- transactional fees are collected at regular intervals but calculated based  on specific regulatory services provided to the user. For example, NRC’s  Part 170 fee is charged for specific services provided to identifiable users  such as licensing and inspection. NRC charges an hourly rate for these  services and bills the users quarterly.
Fee collection procedures have implications for management. Internal  control standards identify properly executing transactions—which can  include fee collections—as a key control activity. Accordingly, agencies  need to have internal controls in place for all user fees to ensure that all  fees due are collected and that each user pays the correct amount,  among other things. An important element for designing these controls is  having accurate and complete data for identifying and billing users. For  example, FDA uses excise tax data when calculating the fee amount paid  by each tobacco manufacturer and importer.
For fees that are collected at the time of specific transactions (rather than  at regular intervals), agencies can ensure all fees are collected by  withholding a service until they are paid. For example, EPA’s MVECP fee  is collected on a transactional basis and the agency uses two checks— one at the time an application is submitted and another before a  certificate is issued—to make sure its MVECP fee has been paid. EPA  will not issue a certificate if the fee has not been paid. By contrast,  internal control mechanisms may take a different form for non- transactional fees, such as periodic inspections, as shown at left.
One advantage of regular collections is that they can create a predictable  revenue stream. According to FDA officials, the non-transactional  elements of the prescription drug user fee—namely, annual fees for  existing prescription drug products and establishments that manufacture  prescription drugs—create a stable, predictable source of revenue,  whereas revenue from the transactional application fees for new  prescription drugs can be less predictable. We have previously concluded  that the timing of fee collections can sometimes cause agencies to  experience revenue instability. Specifically, collections that come in small  increments on a rolling basis or late in the fiscal year may inhibit an  agency’s ability to identify overall patterns and fluctuations, or may create  cash flow challenges.
An additional consideration for managing regulatory user fees is whether  fee collection is manual or automated. We have previously concluded that  moving to electronic collections can reduce costs and mitigate risks, such  as theft. Moreover, two agencies—SEC and OCC—told us that  automating fee collections reduces administrative burden. For example,  SEC officials told us that improvements in automation would alleviate  some of the administrative burdens related to filing fees. Specifically,  many wire transfer payments lack adequate identifying information to post  to the appropriate registrant’s account and are therefore temporarily  posted to an “unassigned” account. So SEC staff must research these  payments and post them to the correct registrant account. According to  officials, if SEC used additional payment options that required registrants  to provide their account information prior to submitting monies to the  SEC, it could eliminate payments going into the unassigned account.  OCC officials also said automation has helped reduced the administrative  burden of the agency’s fee process, which was previously manual.
section_title: Some Agencies Must Receive a Minimum Amount of Appropriations before They Can Begin Fee Collections
paragraphs: The appropriations process can also have implications for the collection  of regulatory user fees. Two of our selected fees have minimum  appropriations thresholds that are established by statute. In other words,  the agency must receive a certain amount of appropriations for the fiscal  year before it can collect fees. For example, under provisions of the  Pesticide Registration Improvement Act of 2003, as amended, pesticide  registration service fees may not be assessed for a fiscal year unless  Congress provides at least a set amount of annual appropriations for  certain functions of the Office of Pesticide programs for that year.  Similarly, prescription drug user fees shall be refunded unless annual  appropriations for salaries and expenses of FDA (excluding the amount of  fees appropriated for that year) are equal to or greater than a specific  amount.
section_title: Using Regulatory User Fees: Variations in Availability of Fees and Unobligated Balances
paragraphs: Considering key questions about using regulatory user fees can enable  Congress and agencies to identify and manage issues related to revenue  instability. As we have previously found, largely or wholly fee-funded  programs do not necessarily see a proportional decline in costs when  they experience a drop in collections. The authority to create or  implement a tool to manage revenue instability may be retained by  Congress or it may be delegated to the agency. Consideration of whether  a user fee will fund a regulatory program includes determining the risk  that fee revenue instability will affect the program and the appropriate  strategies for managing that risk (see figure 3).
subsections: section_title: Available Unobligated Balances Can Sometimes Be Used to Manage Revenue Instability
paragraphs: Some agencies have offsetting collection authority, which allows the  agency to obligate against fee collections without additional congressional  action. These agencies may decide to maintain an unobligated balance  as a strategy to manage revenue instability. While the use of available  unobligated balances to manage revenue instability is not unique to  regulatory user fees, stability of fee revenue can be an important  consideration when agencies rely on fees to carry out regulatory  activities. As we have previously concluded, it is important that an agency  develop a risk-based strategy when considering approaches to managing  fee revenue instability. This strategy would include identification and  analysis of risks, as well as the effect on the agency’s ability to provide  goods and services. Compliance with regulation is often a precursor to  or requirement for engaging in certain businesses or activities.  Sometimes fees are paid for faster and more predictable services and  decisions from regulatory agencies. The agency must also execute its  mission, such as FDA’s mission to ensure the safety and effectiveness of  prescription drugs. For example, each reauthorization of the Prescription  Drug User Fee Act is accompanied by performance goals for FDA’s  prescription drug review program, such as goal time frames for FDA’s  review of new drug applications.
In our prior work, we found that available unobligated balances can help  sustain operations for fee-funded programs in the event of a sharp  downturn in collections or increase in costs. The following agencies  have available unobligated balances that they use to mitigate revenue  instability for fee-funded programs:
OCC maintains an available unobligated balance which, according to  officials, it uses for unexpected expenses and to manage revenue  instability. For example, OCC used these funds when it assumed  certain supervisory responsibilities from the Office of Thrift  Supervision in 2011.
The U.S. Patent and Trademark Office (USPTO) maintains an  available unobligated balance to ensure its ability to maintain  operations. The agency began maintaining this unobligated balance  in 2010 to smooth the impact of economic downturns on operations  and to help address funding uncertainty.
The Animal and Plant Health Inspection Service’s (APHIS) largest fee  comes from air passengers. Airlines collect the fee from passengers  and remit it to the agency quarterly. APHIS maintains an unobligated  balance to cover the time between the provision of services and fee  remittance.
section_title: Collected Fees Are Sometimes Unavailable to the Agency
paragraphs: Some collections are only available to the agencies if Congress  appropriates them. Unavailable balances can accumulate in cases where  the agency is authorized to collect more in fees than Congress  appropriates. For example, at the end of fiscal year 2014, SEC had a $6.6  billion unavailable balance in its Salaries and Expenses account because,  when SEC collects more in Section 31 fees than its annual appropriation,  the excess collections are not available for obligation without additional  congressional action. According to SEC officials, this large unavailable  balance resulted from historical features of its Section 31 fee structure  that are no longer in place. While in recent years Section 31 securities  transaction fee rates have been adjusted annually to equal the agency’s  appropriation, officials said in prior years the amount of fee collections  was disconnected from the appropriations process. As a result, over the  years, SEC collected more in Section 31 fees than Congress  appropriated to the agency, which led to a growing unavailable balance,  as shown in figure 4.
Similarly, the Environmental Protection Agency’s (EPA) Motor Vehicle  and Engine Compliance Program (MVECP) fee collections have not been  made available to the agency. These fees are deposited into the  Environmental Services Special Fund. However, according to officials,  Congress has not appropriated money to EPA from this fund for MVECP  purposes. EPA has instead received annual appropriations which may  be used for MVECP purposes. As a result, the unavailable balance of this  fund has steadily increased. The unavailable balance totaled $370 million  at the end of fiscal year 2014. In contrast, consistent with our findings  from prior work, Customs and Border Protection’s customs air passenger  inspection fees are used to reimburse the agency’s annual appropriations  for a specific set of reimbursable expenses, such as overtime  compensation and certain premium pay costs. Similarly, NRC’s user  fees are used to offset approximately 90 percent of the agency’s  appropriation in a given fiscal year.
section_title: Reviewing Regulatory User Fees: Time Frames and Methods Vary, and Transparency and Stakeholder Outreach Are Critical for Fee Reviews
paragraphs: Regulatory user fee reviews provide decision makers with information  important for deliberations about fee financing, such as identifying effects  of changes in a regulated industry, but the appropriate time frames and  methods will vary by individual circumstances. Given the mix of public  benefits and services to users inherent in regulatory programs, it is  important for fee structures and costs to be transparent. Agencies can  promote transparency by providing appropriate information to address the  diverse needs of policymakers and stakeholders, including fee payers  and the general public. Through appropriate stakeholder involvement and  dissemination of information, decision makers can help avoid the  appearance of regulatory capture (that fee payers have undue influence  on regulatory outcomes) (see figure 5).
subsections: section_title: Fee Review Activities, Time Frames, and Uses Differ
paragraphs: Reviews provide decision makers with comprehensive information  necessary to support robust deliberations about fee financing. The  regulatory agencies included in this report reviewed their fees regularly.  Fee reviews take a variety of forms and the process and practice for  reviewing fees—including activities, time frames, and uses—varied  among the 10 fees we examined. In contrast, some of our previous fee  work found that agencies did not always conduct regular timely reviews of  their user fees. Further, we have previously concluded that fees that are  not regularly reviewed run the risk of becoming misaligned with costs and  consequently overcharging or undercharging users.
Fee review activities can range from comprehensive reviews to ensure  that fees are aligned with costs—as APHIS has done for its Agricultural  Quarantine Inspection fee—to simpler review activities such as  checking to ensure that expected fee collections equal the appropriated  amount. Agency officials described using a variety of fee review activities  tailored to the specific fees. The scope of these activities can depend on  whether the fee is cost-based and the amount of authority Congress has  delegated to the agency. It is important for agencies to monitor internal  controls to ensure they collect the correct amounts from all fee payers.  Statutes or regulatory processes typically determine how often specific  regulatory fees should be reviewed. Through statutes, Congress may  specify the frequency of fee reviews or give an agency discretionary  authority to decide when to review its fees. Four of these agencies are  subject to the Chief Financial Officers Act of 1990, which requires that  they review their fees biennially and recommend fee adjustments as  appropriate. In addition, some regulatory user fees are reauthorized by  Congress at regular intervals and undergo a more in-depth review during  the reauthorization process.
Agency officials reported using Office of Management and Budget (OMB)  Circular A-25, internal guidance, and guidance contained in statutes and  regulations as criteria when reviewing their regulatory fees. OMB Circular  A-25 is applied by agencies in their assessment of user charges under  the Independent Offices Appropriation Act of 1952 and also provides  guidance to agencies regarding their assessment of user charges under  other statutes. Some regulatory fees are charged by agencies that are  not required to follow standard review requirements and criteria. For  example, as a matter of practice, the independent regulatory agencies we  interviewed told us they do not follow Circular A-25. However, National  Credit Union Administration (NCUA) officials noted that NCUA will  evaluate the concepts in OMB Circular A-25 when designing future  operating fee assessments. Also, Congress includes specific criteria in  some authorizing statutes, and three of the case-study agencies referred  to our User Fee Design Guide for criteria.
All six case-study agencies conducted some type of fee review activity  annually. Often these fee reviews were connected to the annual  appropriations process, but the substance of the different fee reviews  varied. Agencies characterized these reviews as ranging from budget  management reviews to more complicated reviews that identified fee  amounts and allocations across different payers and parts of the  regulated industry, and are used to amend fee regulations. The following  examples illustrate this range of review activities:
Officials from FDA’s Center for Tobacco Products, Office of the  Comptroller of the Currency (OCC), and NCUA all identified internal  processes to check whether expected fee collections are aligned with  agency priorities, plans, and commitments. For example, OCC  officials stated that the agency’s projected fees are compared to  projected expenses, as part of the internal budget process, to ensure  that fee levels are adequate to fund the agency.
NRC officials said their fee review process is integrated into its  structured annual fee rule process and associated rulemaking. Most  licensing fees are reviewed and recalculated annually using the  current year budget and NRC’s hourly rate for services provided to  regulated parties. In addition, certain fees have been established as  flat fees. NRC reviews these flat fees and small entity fees biennially  rather than as part the annual fee rule process. However, NRC may  adjust them annually if the hourly rate or time estimate for its services  changes.
SEC officials said they recalculate their fee rates annually as required  by the statutory provisions authorizing the fees. Further, as required  by law, SEC reviews its Section 31 fee rates midyear to determine  whether an adjustment to the fee rates is necessary.
Further, some fees that are reviewed annually undergo more detailed  reviews during the reauthorization process. Some EPA and FDA user  fees are reauthorized by Congress at regular intervals and undergo a  more in-depth review during the reauthorization process. FDA’s  prescription drug user fee is reauthorized every 5 years. The  reauthorization establishes the fee requirements and the process by  which FDA establishes the annual fee rates and requires FDA to provide  annual reports on its progress in meeting negotiated performance goals  for the 5-year period. The reauthorization gives FDA, industry, and public  stakeholders the opportunity to propose and discuss enhancements and  adjustments for the next iteration of the program. Similarly, EPA has a 5- year cycle for reauthorizing its pesticide registration service fees, and fee  reviews are conducted in conjunction with that reauthorization process.  FDA and EPA officials noted that the information they provide as part of  these processes supports deliberations by Congress and stakeholders  about changes to the fee programs.
Reviews of regulatory user fees can be used as an important tool to  identify and respond to changes in the regulated industry. We have  generally highlighted the importance of retrospective regulatory reviews  to, among other things, respond to changes in technology, market  conditions, and the behaviors of regulated entities that cannot be  predicted by prospective analysis before implementation of regulations.  Reviews of regulatory user fees can similarly capture such changes in the  regulated industry that might affect the efficiency and equity of fees. For  example, according to EPA officials, their technical assistance in the  review of pesticide registration service fees is useful in determining  whether additional categories are appropriate. As a result of these fee  reviews, the Pesticide Registration Improvement Act contains about twice  as many pesticide user fee categories than when it was originally enacted  in 2004. For example, over the last 3 reauthorization cycles for this  program, the fee categories more than doubled.
section_title: Attention to Public Participation and Transparency Are Important Considerations during Fee Reviews
paragraphs: Decision makers identified different ways that they ensure appropriate  transparency and opportunities for public participation when reviewing  regulatory user fees. Transparency and public participation are especially  important for regulatory user fees because these fees support a mix of  benefits to the general public, not only to fee payers. In particular these  principles are important for regulatory user fees because these fees are  often a condition of engaging in a particular business. Further, there are  diverse stakeholders, some of whom are not fee payers, who have  varying interests in the implementation of these regulatory user fees and  the programs they support.
For the purposes of this report, transparency entails disclosing information about the fee  process with stakeholders so that regulated entities understand the amount they are  paying and why, and other stakeholders understand how the fees contribute to a  program’s mission and expected public benefits. Public participation entails providing  opportunities for all interested parties and stakeholders to provide input, not just  regulated fee payers.
The forms of stakeholder engagement differed among agencies  according to specific circumstances, such as the underlying statutory  authorities and the amount of discretion the agency is given in setting and  reviewing its fees.
Stakeholder engagement requirements are clear when agencies issue  regulations governing their fees. The federal rulemaking process  provides standards for public notice, opportunities for comment,  agencies’ obligation to respond to significant comments, and the need  to maintain a public rulemaking record. The public notices and  rulemaking record aid public participation in the rulemaking process  and provide access to the supporting facts and analyses for the  agency’s rulemaking decisions. Examples of fees set through notice- and-comment rulemaking include OCC’s semiannual assessments,  NRC’s Part 170 and Part 171 fees, and EPA’s Motor Vehicle and  Engine Compliance Program fees.
In some cases, Congress establishes specific procedures for periodic  reauthorizations of the fee programs. For example, FDA’s prescription  drug fee reauthorization process includes regular meetings between  the agency and industry, in addition to ongoing consultations between  the agency and public stakeholder groups. FDA works with these  stakeholders to develop a negotiated fee proposal, which it submits to  Congress. For the pesticide registration service fee, EPA provides  technical input to a coalition of stakeholders that helps develop the  reauthorization statute.
When an agency does not go through the rulemaking process to  update fees and allocations, agency officials consider which  alternative mechanisms are appropriate to communicate information  about their fees and fee reviews, and to obtain input from  stakeholders and the public. For some fees, agencies publish notices  in the Federal Register that are not subject to stakeholder comment.  This process is typically used when statutes specify a formula that the  agency must apply, and the agency has little discretion in updating the  fee rates, such as with SEC’s fees. OCC and NCUA officials said their  agencies promote transparency by posting information on their  websites when fees are updated. NCUA officials also noted using  public board meetings to disclose information.
Our review of stakeholder comments from rulemakings and public  meetings for these regulatory user fees showed both support for inclusive  fee reviews and fee-setting processes, and concerns that agencies  sometimes are not providing enough transparency. For example, FDA  prescription drug fee stakeholders indicated support for the  reauthorization process, which requires regular meetings between the  agency and industry and public stakeholder groups, while some NRC  stakeholders said that the agency could be more transparent about its  fee-setting process by showing how it arrived at its revised fee rates. In  addition, OMB staff pointed out the importance of agencies having  sufficient understanding of how the timing of the delivery of fee services  affects stakeholders. In general, stakeholders provided substantive  comments about the equity of fees, administrative burden of fees, level of  service, fee setting methods, and fee reviews.
section_title: Transparency and Public Participation Can Help to Mitigate the Appearance of Regulatory Capture
paragraphs: Some of the agencies told us that transparency and participation of all  stakeholders, including public interest groups, can mitigate the risk of  regulatory capture or the appearance of regulatory capture. According to  FDA officials, the perception that there could be regulatory capture is a  concern with some of FDA’s regulatory user fees. To address this issue,  FDA’s prescription drug fee, among other fees, is structured in a way that  minimizes that risk. For example, the performance commitments that FDA  negotiates with the regulated industry focus on the regulatory submission  review process—what will happen and when—and not the outcomes of  the review. In addition, EPA officials said that the agency created a  docket for pesticide registration decisions, such as risk assessments and  proposed registration decisions, and allows the public to comment on  them.
Case study agencies also described other management strategies to  minimize the appearance of regulatory capture. For example, these  strategies include separating fee payments from the outcome of  regulatory reviews both in terms of the processes and the staff involved,  and considering the diverse viewpoints of industry and public interest  stakeholders in the fee-setting process. Further, OCC officials said that  the agency’s contingency reserve allows it to maintain its independence  from the banks by providing revenue stability if a bank were to move to a  different regulator.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Secretaries of Agriculture,  Commerce, Health and Human Services, and Homeland Security; the  Administrator of EPA; the Managing Director of FCC; the Chairmen of  FERC, NCUA, and NRC; the Director of Enterprise Governance of OCC;  and the Chief Operating Officer of SEC for review and comment. We also  provided a copy of the report to the Director, OMB for informational  purposes. We received written responses from the Executive Director of  the National Credit Union Administration and the Executive Director for  Operations of the Nuclear Regulatory Commission, which are reprinted in  appendixes III and IV. NCUA’s response agreed with our findings and  stated that the questions identified in this report will be helpful when the  agency determines future annual operating fee assessments. NRC’s  letter stated that the agency had no comments. We also received  technical comments from the Department of Health and Human Services,  NCUA, OCC, and SEC, which we incorporated as appropriate. APHIS,  CBP, EPA, FCC, FERC, and USPTO had no comments.
We are sending copies of this report to interested congressional  committees and the aforementioned agencies. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-6806 or sagerm@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix V.
section_title: Appendix I: Key Questions for Designing and Implementing Regulatory User Fees
paragraphs: These questions can help decision makers design, implement, and  evaluate regulatory user fees. They are intended to supplement the fee  design questions in Federal User Fees: A Design Guide and Federal User  Fees: Fee Design Options and Implications for Managing Revenue  Instability. While the key questions in those reports remain relevant for  all types of federal user fees, here we provide additional questions that  are specific to regulatory user fees (that is, fees charged by federal  agencies to regulated entities in conjunction with regulatory activities).  These products should be used together when designing, implementing,  and evaluating regulatory user fees. We note that some of these  questions may overlap. Further, we recognize that there is no one-size- fits-all approach to managing regulatory user fees. Because fee designs  vary widely, when considering an individual regulatory user fee some  questions may be more applicable than others.
subsections: section_title: Section I: Setting Regulatory User Fees
paragraphs: 1.  To what extent does Congress retain control, and to what extent does  it delegate authority to the agency?  a.  Is the total amount to be collected set in statute or determined by  the annual appropriations process? b.  Does the fee reimburse the agency’s annual appropriations?  c.  Does the statute specify the fee rate paid by each user, or a  specific formula or methodology that the agency must use to  determine the fee rate? d.  Does the agency use the rulemaking process to set the fee rate?  e.  In cases where rulemaking is not used, how does the agency  communicate new fee rates to users?  2.  To what extent do the fees affect the scope of the agency’s regulatory  activities?  a.  Do the fees provide funding for activities that support the agency’s  regulatory mission?  b.  Are the fees the sole source of funding for the regulatory activities,  or one of multiple sources of funding?  c.  Does the amount of the fee affect the scope of the agency’s  activities to carry out its mission, such as the level, frequency, or  amount of regulation?  d.  What role does Congress play in setting the total amount of the  fee and the rates paid by individual users, and to what extent has  this authority been delegated to the agency?  e.  What role does the appropriations process play, if any, in setting  the total amount of the fee?  3.  To what extent does the regulatory activity for which the fee is  charged provide services to regulated entities and benefits to the  general public?  a.  Is the fee paid as a condition of engaging in a particular activity or  business subject to federal government regulation?  b.  Are fee payers provided with a regulatory service, such as a  certificate or application review? c.
Is the fee intended to fund a higher level of regulatory service than  is funded by annual appropriations, such as expedited reviews?  d.  Do fee payers receive an indirect benefit from federal government  regulation, such as increased consumer confidence or industry  stability?  e.  What public benefits are derived from the regulatory activity for  which the fee is charged?  4.  What consideration has been given to whether small entities should  be allowed exemptions or lower fees?  a.  Does the statute require exemptions or lower fee rates for small  entities?  b.  For fees set by rulemaking, how will the agency consider the  effect of the fee regulation on small entities, as required by the  Regulatory Flexibility Act?  c.  Will the fee structure account for any other policy considerations  for small entities?
section_title: Section II: Collecting Regulatory User Fees
paragraphs: 1.  Will the fee be collected at the time of a transaction, collected at  regular intervals, or both?  a.  What internal controls will be in place to ensure that all fees due  are collected?  b.  For fees collected at regular intervals, what additional record  keeping, data collection, or modeling, if any, is needed to ensure  that fees are collected correctly?  c.  Can the agency withhold service when the fee is not paid?  d.  To what extent can fee collections be automated to reduce  administrative burden and mitigate risks such as theft?  2.  Is there a minimum amount of annual appropriations that must be  received before fees can be collected?
section_title: Section III: Using Regulatory User Fees
paragraphs: 1.  Does the agency rely on user fees to carry out its regulatory mission,  or a portion of its regulatory mission?  a.  If so, what is the risk that the program could face an unexpected  decline in collections or an increase in costs?  2.  Are fee collections available to the agency without further  congressional action?  a.  If so, has the agency considered whether it needs to maintain an  unobligated balance?  b.  Does the statute establish a reserve fund, or specify whether the  agency should establish a reserve fund? c.
If the agency maintains an unobligated balance, does it have a  target amount?
section_title: Section IV: Reviewing Regulatory User Fees
paragraphs: 1.  What methods and time frames are appropriate for reviewing the fee?  a.  What guidance should be used when reviewing the fee?
Specifically, are the provisions of OMB Circular A-25 appropriate,  or is there a need for program-specific guidance?  b.  For independent regulatory agencies that do not follow OMB  Circular A-25, is there a need for policies or requirements to  ensure regular and timely reviews of regulatory user fees?  c.  How, and by whom, will the fee review be used?  d.  Are the fee reviews designed to identify meaningful changes that  might occur in the regulated industry?  2.  What level of transparency, stakeholder outreach, and input is  appropriate as part of the fee review process?  a.  Are fee review results communicated in a way that addresses the  needs of the full range of stakeholders, appropriately addressing  both fee payers and other beneficiaries such as the general  public?  b.  If fee changes are not done through a rulemaking, what alternative  methods or venues can be used to communicate results of fee  reviews and solicit stakeholder input?  c.  How, if at all, will stakeholders provide feedback on the timing of  fee-funded services?  d.  How will the agency avoid the possibility or appearance that fee  payers could have undue influence over regulatory decisions or  outcomes (i.e., regulatory capture)?
section_title: Appendix II: Objectives, Scope, and Methodology
paragraphs: Our objectives were to identify the design and implementation  characteristics of regulatory user fees in terms of how these fees are: (1)  set, (2) collected, (3) used, and (4) reviewed. In carrying out these  objectives, we also assessed the extent to which agencies found the User  Fee Design Guide to be applicable to their regulatory user fees. To  address all of these objectives, we examined the characteristics of  regulatory fees using a literature review, case studies, and a multi-agency  panel discussion.
subsections: section_title: Defining and Identifying Regulatory User Fees
paragraphs: Because there is no one standard definition of a regulatory user fee, and  no comprehensive list of federal user fees, we used a literature review to  define and identify regulatory user fees. Our literature review included  Office of Management and Budget (OMB) and agency budget documents;  Inspectors General, Congressional Budget Office (CBO), and  Organisation for Economic Co-operation and Development (OECD)  reports; and our related reports. We identified relevant literature by  searching web-based databases and resources, including CBO and  Congressional Research Service databases, the Federal Register, and  ProQuest. We also reviewed the President’s budget request for fiscal  years 2015 and 2016 and searched for information on agency websites.  We included in our review any literature that we identified on user fees  charged by the federal government to regulated entities in conjunction  with regulatory activity.
To develop a definition of regulatory user fees for the purposes of this  report, we analyzed the use of this term by other sources, including OMB,  CBO, OECD, and academic literature. Based on these sources and  feedback from the agencies we spoke with in the course of our case  studies and panel discussion, for the purposes of this report, we define  regulatory user fees as a subset of federal user fees which are charged to  nonfederal entities subject to federal government regulation, in  conjunction with regulatory activities.
To develop a list of regulatory user fees that meet our definition, we used  the President’s fiscal year 2015 budget request, agencies’ congressional  budget justifications, agency performance documents, and the results of  our literature review. To ensure that we identified as many regulatory user  fees as possible, we also searched for agencies with certain fiscal  characteristics and high levels of rulemaking activity and corroborated the  results of that search by reviewing agency documents. We determined  that computer-processed data were not expected to materially affect our  findings, conclusions, or key questions, thus rendering a data reliability  assessment unnecessary.
section_title: Case Study Selection
paragraphs: We selected case studies of 10 regulatory user fees within six agencies  based on high dollar amounts of regulatory user fee collections, high  amounts of rulemaking activity, and diverse fee characteristics, including: agencies that are subject to the Chief Financial Officers Act of 1990  (CFO Act) and agencies that are not; independent regulatory agencies and executive agencies; fees that are intended to recover the full cost of operating an agency  or program, as well as fees that are intended to recover partial costs  and fees that are not cost based; and fees that are collected at the time of a specific transaction between  the user and the regulator, and fees that are collected at regular time  intervals (such as annually or quarterly) and not at the time of a  transaction.
The fiscal and regulatory characteristics of our selected case studies are  shown in table 2.
For each case study, we reviewed documents related to the fee, such as  rulemakings and congressional budget justifications, and interviewed  agency officials about their management of the fee, including how  regulatory user fees influence the agency’s regulatory mission and how  congressional control and oversight affect the fee.
We examined stakeholder views on the selected fees by reviewing public  comments on proposed rules in the Federal Register and minutes of  public meetings. Our analysis included the documented views of  stakeholders from the regulated industry, trade associations, public  interest groups, and individual members of the public. We reviewed public  comments on rulemakings to the extent they were available, which we  identified by searching regulations.gov. Public comments on rulemakings  were available for 7 of our 10 selected fees. For each of these 7 fees, we  reviewed comments on from one to four rulemakings depending on the  extent of comments the agencies received, using the most recent  rulemaking available. These rulemakings were issued from 2000 through  2014. For 2 additional selected fees—EPA’s pesticide registration service  fee and FDA’s prescription drug fee—we reviewed minutes of public  meetings because no rulemakings were available. Specifically, we  reviewed the minutes of three public meetings for the pesticide  registration fee, which took place in 2012 and 2013, and the minutes of  one public meeting for the prescription drug fee, which took place in 2011.  We did not examine stakeholder views for SEC’s filing fees because  documentation of stakeholder views was not available. SEC officials said  the agency has not issued any rulemakings or held any public meetings  for this fee. To analyze the stakeholder views for the other selected fees,  one analyst reviewed each source to identify relevant themes—such as  the effect of regulatory user fees on small entities and the transparency of  fee-setting decisions—and categorize stakeholders’ comments related to  those themes. A second analyst then reviewed the documentation to  verify categorization decisions. Then, both analysts met to resolve any  discrepancies. Finally, we evaluated the categorized information to  identify common issues. The results of our review of stakeholder  comments are not generalizable to all stakeholders, but provide insights  into the views of fee payers, public interest groups, and other interested  parties.
section_title: Questionnaire and Panel Discussion
paragraphs: We invited 12 agencies, including the 6 named above, to respond to a  structured questionnaire and participate in a panel discussion. Eleven  agencies completed the questionnaire and 10 attended the panel. In  addition to the 6 case study agencies named above, the panel included  participants from the Animal and Plant Health Inspection Service, Federal  Communications Commission, Federal Energy Regulatory Commission,  and U.S. Patent and Trademark Office. U.S. Customs and Border  Protection officials also completed the questionnaire but were unable to  attend the panel due to a schedule conflict. We also invited the Centers  for Medicare and Medicaid Services, but the agency declined to  participate. These agencies were selected based on our prior reviews of  regulatory user fees, as well as large amounts of regulatory user fee  collections and diversity of fiscal and regulatory characteristics.
To help identify topics for discussion at our panel, we developed and  distributed a questionnaire to obtain these agencies’ views on how  regulatory user fees are set, collected, used, and reviewed, including the  extent to which agencies found the User Fee Design Guide to be  applicable to their regulatory user fees. To minimize errors that might  occur from respondents interpreting our questions differently from our  intended purpose, we pretested the questionnaire by phone with EPA and  SEC officials. During these pretests, we asked officials to review the  questionnaire as we interviewed them to determine whether (1) the  questions were clear and unambiguous, (2) the terms used were precise,  (3) the questionnaire did not place an undue burden on the officials  completing it, and (4) the questionnaire was objective and unbiased. We  modified the questions based on feedback from the pretests, as  appropriate. We distributed the questionnaire on February 25, 2015, and  asked respondents to complete the questionnaire within an electronic  form and return it as an e-mail attachment. We sent follow-up emails to  agencies that had not yet responded on March 6, 2015. We received 11  responses by March 19, 2015. To account for agencies with multiple  regulatory user fees, we instructed each agency to answer the questions  for the one regulatory user fees—or group of similar fees—with the  highest dollar amount of collections in fiscal year 2014. Respondents from  the 11 agencies that completed the questionnaire included officials from  agency budget offices and program offices.
In addition, we held a 3-hour panel discussion with the 10 agencies  named above on March 27, 2015. We used the questionnaire, as well as  the preliminary results of our audit work, to determine discussion topics  for the panel discussion. To do this, we summarized and synthesized this  information to identify common themes. Discussion topics included the  differences between regulatory user fees and other user fees, promising  practices and challenges for managing regulatory user fees, fee reviews,  and managing stakeholder relationships. We used information from the  panel discussion to validate the themes identified in our case studies and  ensure that they are broadly applicable to a larger set of agencies. While  the results of the case studies, questionnaire, and panel discussion are  designed to reflect the broad diversity of regulatory user fee  characteristics, they cannot be generalized to all regulatory user fees.  Because the universe of regulatory user fees is not defined, as noted  above, it was not possible for us to design a representative sample.  Throughout this report, we use specific, selected examples to illustrate  how regulatory user fees are set, collected, used, and reviewed. We also  met with Office of Management and Budget staff to supplement  information obtained from the case studies, questionnaire, and panel  discussion.
We conducted this performance audit from August 2014 through  September 2015 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 III: Comments from the National Credit Union Administration
section_title: Appendix IV: Comments from the Nuclear Regulatory Commission
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Timothy Bober, Assistant  Director, Steven Campbell, Susan Irving, Sharon Miller, and Laurel Plume  made key contributions to this report. Also contributing to this report were  JoAnna Berry, Tom Beall, A. Nicole Clowers, Marcia Crosse, Lorraine  Ettaro, Robert Gebhart, Alfredo Gomez, James R. Jones Jr., Andrea  Levine, Felicia Lopez, Julie Matta, Donna Miller, Amanda Postiglione,  Susan Offutt, Oliver Richard, Cynthia Saunders, Anne Stevens, Colleen  Taylor, Kimberly Walton, and Orice Williams Brown.
section_title: Related GAO Products
paragraphs: Tobacco Product Regulation: Most FDA Spending Funded Public  Education, Regulatory Science, and Compliance and Enforcement  Activities. GAO-14-561. Washington, D.C.: June 20, 2014.
Reexamining Regulations: Agencies Often Made Regulatory Changes,  but Could Strengthen Linkages to Performance Goals. GAO-14-268.  Washington, D.C.: April 11, 2014.
Federal User Fees: Fee Design Options and Implications for Managing  Revenue Instability. GAO-13-820. Washington, D.C.: September 30,  2013.
Agricultural Quarantine Inspection Fees: Major Changes Needed to Align  Fee Revenues with Program Costs. GAO-13-268. Washington, D.C.:  March 1, 2013.
Federal Communications Commission: Regulatory Fee Process Needs to  Be Updated. GAO-12-686. Washington, D.C.: August 10, 2012.  2012 Annual Report: Opportunities to Reduce Duplication, Overlap and  Fragmentation, Achieve Savings, and Enhance Revenue.  GAO-12-342SP. Washington, D.C.: February 28, 2012.
User Fees: Additional Guidance and Documentation Could Further  Strengthen IRS’s Biennial Review of Fees. GAO-12-193. Washington,  D.C.: November 22, 2011.
Budget Issues: Better Fee Design Would Improve Federal Protective  Service’s and Federal Agencies’ Planning and Budgeting for Security.  GAO-11-492. Washington, D.C.: May 20, 2011.
Federal User Fees: Fee Design Characteristics and Trade-Offs Illustrated  by USCIS’s Immigration and Naturalization Fees. GAO-10-560T.  Washington, D.C.: March 23, 2010.
Budget Issues: Electronic Processing of Non-IRS Collections Has  Increased but Better Understanding of Cost Structure Is Needed.  GAO-10-11. Washington, D.C.: November 20, 2009.
Federal User Fees: Additional Analyses and Timely Reviews Could  Improve Immigration and Naturalization User Fee Design and USCIS  Operations. GAO-09-180. Washington, D.C.: January 23, 2009.
Immigration Application Fees: Costing Methodology Improvements Would  Provide More Reliable Basis for Setting Fees. GAO-09-70. Washington,  D.C.: January 23, 2009.
Federal User Fees: Substantive Reviews Needed to Align Port-Related  Fees With the Programs They Support. GAO-08-321. Washington, D.C.:  February 22, 2008.
Federal User Fees: A Design Guide. GAO-08-386SP. Washington, D.C.:  May 29, 2008.
Federal User Fees: Improvements Could Be Made to Performance  Standards and Penalties in USCIS’s Service Center Contracts.  GAO-08-1170R. Washington, D.C.: September 25, 2008.
Federal User Fees: Key Aspects of International Air Passenger Inspection  Fees Should Be Addressed Regardless of Whether Fees Are  Consolidated. GAO-07-1131. Washington, D.C.: September 24, 2007.
Federal User Fees: Some Agencies Do Not Comply With Review  Requirements. GAO/GGD-98-161. Washington, D.C.: June 30, 1998.
Federal User Fees: Budgetary Treatment, Status, and Emerging  Management Issues. GAO/AIMD-98-11. Washington, D.C.: December 19,  1997.