REINS Act: Number and Types of “Major Rules” in Recent Years
Released: 2011-12-02T00:00:00

Introduction

The Congressional Review Act (CRA, 5 U.S.C. §§801-808) requires each federal agency to send its covered final rules to the Comptroller General at the Government Accountability Office (GAO) and to both houses of Congress before the rules can take effect. The CRA generally requires agencies to delay the effective dates of "major" final rules until 60 days after the date that the rules are published in the Federal Register or submitted to Congress, whichever is later. The act also requires the Comptroller General to provide a report to the congressional committees of jurisdiction within 15 calendar days after each major rule is submitted or published, with the report summarizing the issuing agency's compliance with relevant rulemaking requirements. The CRA defines a "major rule" as

any rule that the Administrator of the Office of Information and Regulatory Affairs [OIRA] of the Office of Management and Budget [OMB] finds has resulted in or is likely to result in—(A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. The term does not include any rule promulgated under the Telecommunications Act of 1996 and the amendments made by that Act.

The CRA also established expedited legislative procedures (primarily in the Senate) by which Congress may disapprove any final rule (not just major rules) by enacting a joint resolution of disapproval (which requires subsequent signature by the President). Signed into law on March 29, 1996, as part of the Small Business Regulatory Enforcement Fairness Act (SBREFA, Title II of P.L. 104-121 , 5 U.S.C. §601 note), the CRA was an attempt to reestablish a measure of congressional authority over rulemaking. However, in the nearly 15 years since the CRA's enactment, it has been used to disapprove one rule.

REINS Act

Under the CRA, an agency regulation takes effect as provided by law unless Congress disapproves the rule with a CRA joint resolution of disapproval. In contrast, the Regulations from the Executive In Need of Scrutiny (REINS) Act ( H.R. 10 and S. 299 , 112 th Congress) would (if enacted) generally require the enactment of a joint resolution of approval before any "major rule" could take effect. Specifically, the REINS Act would amend Chapter 8 of Title 5, United States Code, and in the new Section 802, would require that a joint resolution of approval be introduced within three session days or legislative days after a major rule is submitted to Congress. The bills also state that if a joint resolution of approval for a major rule is not enacted by the end of 70 session days or legislative days after such resolution is introduced, the rule shall be deemed not to be approved and shall not take effect. However, according to the new Section 801 of Title 5, a major rule could take effect for 90 calendar days without such approval if the President determines that it is necessary because of an imminent threat to health or safety or other emergency, for the enforcement of criminal laws, for national security, or to implement an international trade agreement.

The REINS Act states that its purpose is "to increase accountability for and transparency in the federal regulatory process." It goes on to say that

Section 1 of article I of the United States Constitution grants all legislative powers to Congress. Over time, Congress has excessively delegated its constitutional charge while failing to conduct appropriate oversight and retain accountability for the content of the laws it passes. By requiring a vote in Congress, the REINS Act will result in more carefully drafted and detailed legislation, an improved regulatory process, and a legislative branch that is truly accountable to the American people for the laws imposed upon them.

The REINS Act was reported by the House Committee on the Judiciary on November 10, 2011, and by the Committee on Rules on November 18, 2011.

Comments Regarding the REINS Act

Reactions to the REINS Act from non-governmental observers have been mixed. Several of these observers have expressed support for the act. For example, an editorial in the Wall Street Journal stated that the legislation "would revolutionize government in practice and help restore the representative democracy the founders envisioned." Wayne Crews of the Competitive Enterprise Institute said major rules "are the ones costing $100 million annually," and said that "reaffirming Congress' accountability to voters for agencies' most costly rules is a basic principle of good government." Phil Kerpen of Americans for Prosperity said that the REINS Act "is the most important legislative effort to reform the regulatory process in Congress." At a January 24, 2011, hearing held by the House Committee on the Judiciary's Subcommittee on Courts, Commercial and Administrative Law, Jonathan H. Adler, a professor of law at Case Western Reserve University School of Law, said that the REINS Act "offers a promising mechanism for disciplining federal regulatory agencies and enhancing Congressional accountability for federal regulations."

Other observers, however, have expressed concerns about the legislation. For example, Sidney Shapiro of the Center for Progressive Reform said,

The REINS Act would make Congress the final arbiter of all significant regulatory decisions. While superficially this may seem like a good idea – after all, Members of Congress are elected and regulators are not – the REINS Act would replace what is good about agency rulemaking with what is bad about the legislative process. Neither Members of Congress nor their staffs are likely to have sufficient scientific, engineering and economic expertise regarding complex regulations. And, unlike agencies, Congress does not have to have good policy reasons for refusing to approve a regulation. Instead, the approval process is likely to be nakedly political, reflecting the raw political power of special interests and the large campaign donations that they give.

Concerns have also been raised regarding the constitutionality of the congressional approval process contemplated by the REINS Act, and the amount of time that it would take to approve all major rules each year. For example, at the above-mentioned January 24, 2011, hearing on the REINS Act, Sally Katzen, a professor of law and former Administrator of OIRA, raised several constitutional issues regarding the proposed legislation. Overall, she said that the REINS Act "is not well considered, it is not tailored to the problem it is attempting to solve, and it will inevitably have unintended but nonetheless significant adverse effects on the economy and society at large, including fundamentally changing our constitutional form of government."

Methodology Used in This Report

This report provides information on the types of "major rules" that may be subject to the REINS Act, if it is enacted. Specifically, the report identifies how many major rules have been issued in recent years, and which agencies have issued them. It also attempts to identify why OIRA considered certain rules published during calendar year 2010 to be major rules under the CRA. The Appendix to this report provides a chronological list of the major rules from 2010, along with information that GAO and the agencies provided on the economic effects of the rules.

To determine the number of major rules that have been issued and which agencies issued them, CRS used the GAO database of rules submitted to the Comptroller General pursuant to the requirement in the CRA. That database (available at http://www.gao.gov/fedrules/ ) allows users to identify the number of rules that were published in the Federal Register by year and by cabinet department and within an "Independent Agencies and Government Corporations" category, and to determine which of the rules were considered "major rules." CRS considers the GAO database to be one of the most authoritative and accessible sources of information regarding final rules and major final rules pursuant to the CRA.

Because the CRA states that the OIRA Administrator is to determine which rules are to be considered "major," CRS initially contacted OIRA and OMB officials, and asked for their assistance in determining why certain rules published during calendar year 2010 were classified as "major rules." Although OIRA did not discuss exactly why particular rules were considered major, the current associate administrator of OIRA did provide information regarding the criteria that OIRA uses to make those determinations. For example, he said that OIRA considers a rule "major" if any related economic effects (e.g., compliance costs, regulatory benefits, federal budgetary transfers, fees, or consumer spending) are expected to meet or exceed the $100 million threshold in any year.

The previously mentioned GAO database provides links to GAO's major rule reports that summarize agencies' compliance with certain rulemaking requirements. One section of those reports summarizes the agencies' cost-benefit analyses, to the extent that the agencies prepared such analyses. CRS used that information to analyze why the major rules appeared to be considered "major" under the CRA. When the information in the GAO reports did not clearly indicate the reason (e.g., because the agency did not prepare a cost-benefit analysis, or when the summary did not provide estimates of economic effects), CRS reviewed the preambles to the rules to determine why the rules appeared to be considered major. The conclusions that CRS reached were based on the best available information, and were arrived at using the same general criteria that OIRA reportedly uses to make those determinations. Nevertheless, the conclusions are only our informed assessments. For that reason, this report states that certain rules "appeared" to be major for certain reasons.

Number of Major Rules and the Agencies That Issued Them

The previously mentioned Wall Street Journal editorial stated that the number of major rules issued by federal agencies had increased substantially during the Barack Obama Administration, from an average of between 30 and 40 rules per year during the previous 25 years to 59 in 2009 and 62 in 2010. Susan Dudley, director of the George Washington University Regulatory Policy Center and former Administrator of OIRA, wrote that the Obama Administration had issued an average of 66 major rules per year during its first two years in office, compared to 47 and 48 major rules per year during the Clinton Administration and the Bush Administration, respectively. Other observers have offered different counts for the number of major rules issued in recent years.

CRS is not aware of any data on the number of major final rules published prior to March 1996, when the CRA was enacted. As Table 1 below indicates, however, GAO's database of rules submitted to the Comptroller General shows that in 9 of the 14 full calendar years since the CRA was enacted, federal agencies published between 50 and 70 major rules. The agencies issued 76 major rules in 1998 and 77 major rules in 2000. The number of major rules issued during a single calendar year first exceeded 80 in 2008 (the last full year of the George W. Bush Administration), when 95 major rules were published. In calendar year 2009, the first calendar year of the Obama Administration, federal agencies issued 84 major final rules. However, 11 of those 84 rules were actually issued in early January 2009, during the final days of the Bush Administration. During calendar year 2010, federal agencies published 100 major final rules.

Another way to discuss the GAO data on major rules is by comparing time periods during recent administrations. The results vary depending on which time periods are chosen. For example, see the following:

During the last full year of the Bush Administration (from January 22, 2008, through January 21, 2009), federal agencies published 102 major rules. During the first full year of the Obama Administration (from January 22, 2009, through January 21, 2010), federal agencies published 79 major rules. During the last two full years of the Bush Administration (from January 22, 2007, through January 21, 2009), federal agencies published 168 major rules. During the first two full years of the Obama Administration (from January 22, 2009, through January 21, 2011), federal agencies published 175 major rules. During the first full year of the Bush Administration (from January 22, 2001, through January 21, 2002), federal agencies published 54 major rules. During the first full year of the Obama Administration (from January 22, 2009, through January 21, 2010), federal agencies published 79 major rules. During the first two full years of the Bush Administration (from January 22, 2001, through January 21, 2003), federal agencies published 103 major rules. During the first two full years of the Obama Administration (from January 22, 2009, through January 21, 2011), federal agencies published 175 major rules.

Table 1 also indicates that the number of major rules issued in a particular year is not strongly correlated with the number of final rules that were issued during the year. For example, in 1999, federal agencies published 4,373 final rules (the second-largest number of rules during the 14 full calendar years since the enactment of the CRA), but only 51 major rules (the second-lowest number of major rules during this period). The years with the largest number of major rules (2008 and 2010) were also years in which the total number of final rules issued was relatively low.

Agencies Issuing Major Rules

Table 2 below shows the number of final rules and major final rules by cabinet department and agency from 2004 through 2010. (The starting point of 2004 was selected because that was the first full year that the Department of Homeland Security was in existence, and government organization has been relatively stable since that date.) The table indicates that the number of rules and major rules issued has varied considerably by department and agency, and that the number of final rules that an agency issues is not necessarily an indication of how many major rules the agency will issue. For example, although the Department of Commerce published more than 2,000 final rules during this period, only 6 of those rules (0.2%) were considered "major." In contrast, the Department of Health and Human Services (HHS) issued 627 final rules from 2004 through 2010, of which 144 (23%) were considered major rules.

Rules Appear to Be "Major" for a Variety of Reasons

As noted earlier in this report, the CRA generally defines a "major rule" as one that OIRA concludes "has resulted in or is likely to result in (A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets." Within the first of these three definitional categories, OMB reports, agency rules, and the current OIRA associate administrator indicate that a rule may have a $100 million annual "effect on the economy" in any of several ways. For example, if a rule is expected to have $100 million in compliance costs in any one year, it would likely be considered a "major" rule. If a rule is expected to produce economic benefits in any one year that are valued at $100 million, that rule would also likely be considered "major." Other rules that increase or reduce federal grants, subsidies, or other types of "transfer" payments by at least $100 million in any year, or rules that increase federal fees or other revenues by at least $100 million in a year, would also appear to meet this definition of a major rule. Also, if a rule is expected to yield a $100 million "consumer surplus" during a year by triggering consumer spending, it would also appear to be a "major rule."

Table 3 below takes the 100 major rules that were published during calendar year 2010 and, using information in GAO's reports on the major rules and information in the preambles to the rules themselves, illustrates which of the various definitions of a "major rule" appear to be applicable to them (i.e., why the rules were considered "major"). The table divides the category of "$100 million annual effect on the economy" into five subcategories (regulatory costs, regulatory benefits, transfers, consumer surplus, and fees and revenues). In some cases, more than one category or subcategory applies to a single rule. For example, if a rule was expected to result in at least $100 million in annual compliance costs and was also expected to result in at least $100 million in annual benefits, then both subcategories would appear to apply. Therefore, the number of explanations provided overall (and sometimes by agency) exceeds the number of rules issued. However, if a rule appeared to be major because it had $100 million or more in annual compliance costs, CRS did not also code it as having a "major" increase in costs or prices.

Figure 1 below indicates how many rules were associated with each category (or categories) of explanation. As the figure shows, 37 of the rules appeared to be "major" only because they were expected to produce $100 million in costs, $100 million in benefits, or both; 34 of the rules appeared to only involve some type of transfer (23 were increased transfers, 7 were decreased transfers, and 4 were non-federal transfers); 16 rules appeared to be major only because they were expected to result in increased costs or prices (but not at or above the $100 million threshold); 6 rules appeared to only involve "consumer surplus" issues; 4 rules appeared to only involve changes to fee structures; and 3 rules appeared to be major for multiple reasons.

Transfer Rules, Fee Rules, and Consumer Surplus Rules

As Table 3 and Figure 1 illustrate, the 100 major rules that were issued during calendar year 2010 appeared to have been considered "major" for a variety of reasons. Most of these rules appeared to be major because they were expected to have a $100 million annual "effect on the economy," but those effects sometimes seemed not directly related to expected regulatory compliance costs or the expected benefits of the rules.

Transfer Rules

For example, 37 of the 100 rules appeared to be "major" at least in part because they involved transfers of funds from one party to another party, most commonly the transfer of federal funds to the recipients of those funds (e.g., grants, food stamps, Medicare or Medicaid funds, special pay for members of the military, and crop payments).

Increased Federal Transfers

In 23 of these transfer rules, the federal transfer payments appeared to be increasing. For example, see the following:

A January 25, 2010, DOE rule on "Weatherization Assistance Program for Low-Income Persons" reduced the procedural burdens on evaluating applications from buildings that are part of HUD assisted and public housing programs, the Federal Low Income Housing Tax Credit Program, and the USDA Rural Development Program. DOE indicated that the $5 billion in grants provided under this program by the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) made the rule a major rule, and "constitute transfer payments, meaning that they do not represent a change in the total resources available to society." A January 29, 2010, USDA Food and Nutrition Service rule established new eligibility and certification requirements for the receipt of food stamps. USDA said that it expects this rule to simplify program administration, allow states greater flexibility, and provide enhanced access to eligible populations. The agency estimated that the total transfer costs to the government of this rule would be $2.669 billion in FY2010 and $13.541 billion during the five-year period from FY2010 through FY2014. A March 12, 2010, rule issued by the Office of Innovation and Improvement within ED established priorities, requirements, definitions, and selection criteria under the Investing in Innovation Fund, which provides funding support to local educational agencies (LEAs) and nonprofit organizations in a partnership with one or more LEAs or a consortium of schools with a record of improving student achievement and attainment. ED estimated that the final rule would result in associated "annual monetized transfers" of $643 million per year from the federal government to LEAs and nonprofit organizations. An April 16, 2010, DOD rule provided for retroactive stop loss special pay to members of the military service as authorized and appropriated in the Supplemental Appropriations Act, 2009 (Section 310 of P.L. 111-32 ). Although DOD did not provide a cost-benefit analysis with the final rule, in the preamble to the rule the department stated that the rule would have a $100 million annual impact on the economy in that the "Supplemental Appropriations Act, 2009 appropriated $534,400,000 to the Department of Defense, to remain available for obligation until expended." A July 22, 2010, rule issued by the Centers for Medicare and Medicaid Services (CMS) within HHS announced the annual update to the hospice wage index for FY2011 and continued the phase out of the wage index budget neutrality adjustment factor. As a result, CMS estimated that total federal hospice payments would increase by $220 million in FY2010. A July 30, 2010, rule issued by the Office of Consumer Information and Insurance Oversight (OCIIO) within HHS implemented Section 1101 of the Patient Protection and Affordable Care Act of 2010 (PPACA, P.L. 111-148 , March 23, 2010), which required HHS to establish, either directly or through contracts with states or nonprofit entities, a temporary high-risk health insurance pool program to provide affordable health insurance coverage to uninsured individuals with pre-existing conditions. OCIIO estimated that the annual reporting and recordkeeping costs would be less than $2 million, but said that $5 billion in federal funds would be transferred from the Secretary to contractors to aid in administering the program from July 1, 2010, to December 31, 2013. An August 31, 2010, DVA rule amended the department's adjudication regulations to implement the decision of the Secretary of Veterans Affairs that there is a positive association between exposure to certain herbicides and the subsequent development of hairy cell leukemia and other chronic B-cell leukemias, Parkinson's disease, and ischemic heart disease. DVA estimated that the total cost for this rulemaking (primarily retroactive and ongoing benefits payments) to be $13.6 billion during FY2010, $25.3 billion for 5 years, and $42.2 billion over 10 years. An October 25, 2010, rule issued by the Farm Service Agency (FSA) within USDA provided emergency assistance to reestablish the purchasing of rice, cotton, soybeans, and sweet potatoes in specified counties for which a disaster designation was issued based on excessive moisture and related conditions for the 2009 crop year. The rule specified the eligibility requirements, payment calculations, and application procedures for the Crop Assistance Program. FSA estimated that the total cost to the government for the program would be between $137 million and $543 million, depending on how many producers in disaster counties applied for payments.

One other rule appeared to be "major" because federal loans were expected to be converted into transfer payments (which we coded as a transfer increase). On January 19, 2010, the Federal Emergency Management Agency (FEMA) within DHS published a rule that amended the agency's Special Community Disaster Loan (CDL) Program regulations to establish procedures and requirements for Special CDL cancellations. The cancellations were authorized by Section 4502(a) of the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007 ( P.L. 110-28 ). The Special CDL Program and the cancellation provisions applied to communities in the Gulf Coast region who received Special CDLs following Hurricanes Katrina and Rita. FEMA estimated that up to $1.3 billion in loans, interest, and costs could be forgiven under this effort.

Decreased Federal Transfers

Nine other major rules appeared to be "major" at least in part because they were decreasing the amount of federal transfers provided. For example, see the following:

An August 12, 2010, CMS rule implemented a new prospective payment system for Medicare outpatient end-stage renal disease dialysis facilities, in compliance with the Medicare Improvements for Patients and Providers Act of 2008 ( P.L. 110-275 ). The rule also replaced the previous payment system and the methodologies for the reimbursement of separately billable outpatient end-stage renal disease services. CMS estimated that there would be an approximately $200 million decrease in payments to all end-stage renal disease facilities for renal dialysis during calendar year 2011, compared to what the payments would have been that year in the absence of this rule. An August 16, 2010, CMS rule revised the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals to implement changes arising from the agency's continuing experience with these systems, and to implement certain statutory provisions. The rule also described the changes to the amounts and factors used to determine the rates for Medicare acute care hospital inpatient services for operating costs and capital-related costs, and updated the rate-of-increase limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis subject to these limits. In addition, the rule updated the payment policy and the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs) and set forth the changes to the payment rates, factors, and other payment rate policies under the LTCH PPS. CMS estimated that the final applicable percentage increase to the IPPS rates required by the statute, in conjunction with other final payment changes in the rule, would result in a $440 million decrease in FY2011 operating payments and an estimated $21 million decrease in FY2011 capital payments. An October 15, 2010, DOD rule implemented Section 703 of the National Defense Authorization Act for Fiscal Year 2008, which stated that, with respect to any prescription filled on or after the date of enactment, the TRICARE Retail Pharmacy Program shall be treated as an element of DOD for purposes of procurement of drugs by federal agencies under 38 U.S.C. Section 8126, to the extent necessary to ensure pharmaceuticals paid for by DOD that are provided by network retail pharmacies to TRICARE beneficiaries are subject to Federal Ceiling Prices (FCPs). Section 8126 established FCPs for covered drugs (requiring a minimum 24% discount) procured by DOD and three other agencies from manufacturers. DOD estimated that the rule would result in cost reductions from applying FCPs to the TRICARE Retail Pharmacy Network in FY2010 through FY2015 of between $375 million and $560 million for Defense Health Program spending, and between $474 million and $707 million for Medicare-Eligible Retiree Health Care Fund spending.

Non-federal Transfers

Five major rules appeared to be "major" not because of increases or decreases in the transfer of federal funds, but because they were (at least in part) expected to result in annual transfers of $100 million or more from one population group to another. Four of the rules were jointly issued by the Internal Revenue Service (IRS) within the Department of the Treasury, the Employee Benefits Security Administration (EBSA) within the Department of Labor, and CMS within the Department of Health and Human Services. For example, see the following:

A February 2, 2010, rule required parity between mental health or substance use disorder benefits and medical/surgical benefits with respect to financial requirements and treatment limitations under group health plans and health insurance coverage offered in connection with a group health plan. The rule replaced regulations implementing the Mental Health Parity Act of 1996, and made conforming changes to reflect modifications to the act. The agencies said that the rule was considered "major" because total health care premiums were expected to rise 0.4%, and that increase was considered a transfer from those individuals not using mental health and substance use disorder benefits to those who do. The agencies estimated that those undiscounted transfers to be about $25.6 billion during the next 10 years. A May 13, 2010, rule implemented the requirements for group health plans and health insurance issuers in the group and individual markets under provisions of the Patient Protection and Affordable Care Act regarding dependent coverage of children who have not reached age 26. Specifically, a plan or issuer that makes available dependent coverage of children was required to make such coverage available for children until attainment of 26 years of age. The agencies estimated the 2011 to 2013 transfers associated with this rule at between $3.5 and $6.9 billion, with the funds moving from individuals with family health insurance coverage who do not have dependents aged 19-25 to those individuals with family health insurance coverage that do have such dependents.

One other rule issued by the Commodity Credit Corporation within USDA also appeared to be a major rule because of these kinds of non-federal transfers.

"Consumer Surplus" Rules and Rules Establishing Fees

Six of the 100 major rules appeared to be "major" because they were expected to trigger a certain type of economic activity by the public (termed a "consumer surplus"). All six of these rules were issued by DOI's Fish and Wildlife Service (FWS), and established hunting seasons and bag limits for certain types of migratory birds. For example, a September 23, 2010, FWS rule prescribed final late-season frameworks from which the states could select season dates, limits, and other options for the 2010-2011 migratory bird hunting seasons. Based on an economic analysis prepared for an earlier season, FWS estimated that the rule would result in a consumer surplus of between $205 million and $270 million. The other five FWS rules had similar consumer surplus estimates.

Four other rules appeared to be considered "major" because they established fee structures that were intended to fund certain government operations. For example, see the following:

A June 16, 2010, NRC rule amended the licensing, inspection, and annual fees charged to the agency's applicants and licensees. NRC said it viewed these amendments as necessary to implement the Omnibus Budget Reconciliation Act of 1990, as amended (42 U.S.C. §2214), which the agency said generally requires the NRC to recover through fees approximately 90% of its budget authority in FY2010. NRC determined that its required fee recovery amount for FY2010 was approximately $912.2 million and that, after accounting for billing adjustments, the total amount to be billed as fees was approximately $911.1 million. A June 28, 2010, Department of State rule adjusted the Schedule of Fees for Consular Services based on an independent cost of service study's findings that the United States was not fully covering its costs for providing these services under the previous fee structure. The department said that its primary objective was to ensure that fees for consular services reflected the costs to the United States of providing the services to the extent possible. Among other things, the rule increased the Passport Book Application Services fee (for applicants age 16 and older) from $55 to $70, which was expected to produce additional fees of about $138 million. An increase in the Passport Book Security Surcharge from $20 to $40 was expected to generate additional fees of nearly $239 million. A September 24, 2010, DHS rule adjusted the fee schedule for the U.S. Citizenship and Immigration Services to fully recover costs and maintain adequate service. DHS said that the rule would provide it with an average of $209 million in FY2010 and FY2011 annual fee revenue over the fee revenue that would have been collected under the previous fee structure. DHS said that the increased revenue would be used to fund the full cost of processing immigration benefit applications and associated support benefits, providing similar benefits to asylum and refugee applicants, and providing similar benefits to others at no charge.

Expected Compliance Costs, Regulatory Benefits, or Both

Executive Order 12866 requires covered agencies (Cabinet departments and independent agencies, but not independent regulatory agencies) to prepare a cost-benefit analysis for any rule that is expected to be "economically significant." According to OMB, the definition of an "economically significant" rule in the executive order is somewhat narrower than the definition of a "major rule" under the CRA (e.g., a $100 million annual "effect on the economy"). Also, Section 1 of the executive order states that

Costs and benefits shall be understood to include both quantifiable measures (to the fullest extent that these can be usefully estimated) and qualitative measures of costs and benefits that are difficult to quantify, but nevertheless essential to consider. Further, in choosing among alternative regulatory approaches, agencies should select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity), unless a statute requires another regulatory approach.

Thirty-nine of the 100 major rules that were published during calendar year 1999 appeared to be "major" at least in part because they were expected to result in at least $100 million in annual compliance costs, $100 million in annual benefits, or both. (Thirty of the rules were expected to have regulatory costs of at least $100 million, and 29 rules were expected to have regulatory benefits of at least $100 million.) In 20 of the 39 rules, estimated costs and benefits were both expected to exceed $100 million. In the 19 other major rules, the agencies did not provide a monetary estimate of either annual costs or benefits, or those estimates were less than $100 million.

In almost all of the rules in which both benefits and costs were estimated and monetized, the agencies' average or central estimates of regulatory benefits were larger than their average or central estimates of compliance costs. However, in some of these cases, the ranges of estimated benefits and costs overlapped, or could overlap. Therefore, while these rules appeared likely to produce net benefits, it is theoretically possible that the costs of the rules could exceed the benefits (assuming the agencies' estimates of the range of costs and benefits are accurate). For example, see the following:

A February 9, 2010, rule issued by the Environmental Protection Agency (EPA) revised the primary nitrogen dioxide national ambient air quality standards. The rule established a new 1-hour standard at a level of 100 parts per billion, and established requirements for a nitrogen dioxide monitoring network that will include monitors at locations where maximum nitrogen dioxide concentrations are expected. Nevertheless, EPA estimated that the cost of the rule in the year 2020 would be between $270 million and $510 million (in 2006 dollars), and the estimated benefits that year would be between $120 million and $580 million (in 2006 dollars). Therefore, EPA said the rule could result in either positive or negative net benefits. A March 3, 2010, EPA rule promulgated national emission standards for hazardous air pollutants for certain existing stationary compression ignition reciprocating internal combustion engines. The rule also promulgated national air standards for hazardous air pollutants for certain existing non-emergency stationary compression ignition engines. EPA estimated the total national capital cost for the final rule to be $744 million, with a total national annual cost of $373 million in 2013. EPA estimated the monetized benefits of the rule to be between $850 million and $2.3 billion in 2013. Therefore, if $478 million or more of the expected capital costs occur in 2013, the total estimated costs of the rule in that year would exceed the lowest estimated benefits. A May 28, 2010, rule issued by the Federal Aviation Administration (FAA) within DOT amended the agency's regulations by adding equipage requirements and performance standards for Automatic Dependent Surveillance-Broadcast (ADS-B) Out avionics on aircraft operating in Classes A, B, and C airspace, as well as certain other specified classes of airspace within the U.S. National Airspace System. FAA said that the rule facilitated the use of ADS-B for aircraft surveillance by FAA and DOD air traffic controllers to safely and efficiently accommodate aircraft operations and the expected increase in demand for air transportation. The agency estimated that the undiscounted quantified benefits of the final rule ranged from $6.8 billion to $8.5 billion, and estimated the undiscounted incremental costs at between $3.3 billion and $7.0 billion. Therefore, although average expected benefits substantially exceeded average expected costs, the highest estimate of cost ($7.0 billion) was slightly higher than the lowest estimate of benefits ($6.8 billion). A September 15, 2010, rule issued by the Civil Rights Division within DOJ revised the regulation that implements Title II of the Americans with Disabilities Act (ADA), relating to nondiscrimination on the basis of disability in state and local government services. The department reportedly issued this rule in order to adopt enforceable accessibility standards under the ADA that are consistent with the minimum guidelines and requirements issued by the Architectural and Transportation Barriers Compliance Board (Access Board), and to update or amend certain provisions of the Title II regulation so that they comport with the department's legal and practical experiences in enforcing the ADA since 1991. DOJ's estimate of compliance costs ranged from $12.8 billion to $25.8 billion, and the estimate of benefits ranged from $22.0 billion to $66.2 billion. Therefore, although average expected benefits substantially exceeded average expected costs, the highest estimate of cost ($25.8 billion) was higher than the lowest estimate of benefits ($22.0 billion).

Net Benefits

In 14 of the 20 rules with estimated annual regulatory costs and benefits of at least $100 million, the agencies' lowest estimates of regulatory benefits were larger than the highest estimated compliance costs. Therefore, assuming that the agencies' estimates of the range of costs and benefits were correct, the rules should produce positive net benefits. For example, see the following:

A March 9, 2010, DOE rule established energy conservation standards for small electric motors. The department estimated that the annualized costs of this rule would be about $264 million per year. DOE estimated a range of possible values for the total monetary benefits of this final rule from $867.5 million to about $1.36 billion. A March 19, 2010, rule issued by the Food and Drug Administration (FDA) within HHS was identical to the provisions of the final rule on cigarettes and smokeless tobacco published by FDA in 1996, with certain required exceptions. The rule prohibited the sale of cigarettes and smokeless tobacco to individuals under the age of 18 and imposed specific marketing, labeling, and advertising requirements. Although FDA did not include a cost-benefit analysis in the 2010 rule, in the 1996 rule, the agency said that the rule could prevent 60,000 early deaths. The monetary value of these and other health benefits was estimated to be between $9.2 billion and $43 billion per year. FDA estimated the rule's overall compliance costs at from $174 million to $187 million in one-time costs, and from $149 million to $185 million in annual operating costs. Therefore, even if the highest estimated one-time costs occurred in the same year as the highest estimated annual operating costs, the total would still be less than the lowest estimated benefits for that year. An April 5, 2010, rule issued by the Federal Motor Carrier Safety Administration (FMSCA) within DOT incorporated new performance standards for electronic on-board recorders (EOBRs) installed in commercial motor vehicles manufactured on or after June 4, 2012. The rule also made motor carriers that have demonstrated serious noncompliance with hours-of-service rules subject to mandatory installation of EOBRs meeting the new performance standards. FMSCA said that the costs of the final rule on an annualized basis over a 10-year period would be $139 million. FMCSA determined the benefits of the final rule to be $182 million annually, which included safety benefits of electronic on-board recorder use by estimating reductions in hours of service violations and resulting reductions in fatigue-related crashes. An April 16, 2010, DOE rule amended the existing energy conservation standards for residential water heaters (other than tabletop and electric instantaneous models), gas-fired direct heating equipment, and gas-fired pool heaters. DOE determined that the annualized monetized benefits of the rule would be between $1.67 billion per year and $2.02 billion per year, with costs estimated to be between $1.25 billion per year and $1.28 billion per year. An August 9, 2010, rule issued by the Occupational Safety and Health Administration (OSHA) within DOL revised the agency's "Cranes and Derricks Standard" and related sections of the "Construction Standard" to update and specify industry work practices necessary to protect employees during the use of cranes and derricks in construction. This rule also addressed advances in the designs of cranes and derricks, related hazards, and the qualifications of employees needed to operate them safely. OSHA estimated that the total annualized costs of the rule would be $154.1 million. OSHA estimated that the annual benefits included injuries prevented (175), fatalities prevented (22), and property damage from tipovers prevented ($7 million), for total monetized benefits of $209.3 million.

Net Costs

In only one of the major rules did the agency indicate that the rule would likely result in net costs (i.e., that the highest estimate of benefits was less than the lowest estimate of costs). On January 15, 2010, the Federal Railroad Administration (FRA) within DOT issued a rule on "Positive Train Control Systems" that were required on certain passenger and freight rail lines by the Rail Safety Improvement Act of 2008 ( P.L. 110-432 , 122 Stat. 4854, October 16, 2008). Congress enacted the statutory requirement in the wake of several serious rail accidents involving dozens of fatalities and hundreds of injuries. FRA estimated that the rule would reduce deaths and injuries from this type of accident by more than 50%, and estimated the monetized benefits of the rule at between $440 million and $674 million. However, the agency estimated the 20-year costs at between $9.5 billion and $13.2 billion—about 20 times greater than the estimated benefits. FRA noted this imbalance in the rule, but said it was "constrained by the requirements of [the Rail Safety Improvement Act of 2008], which do not provide latitude for implementing [positive train controls] differently."

Monetized Costs but Non-monetized Benefits

In several other rules, the agencies estimated the annual compliance costs at $100 million or more, but provided only qualitative descriptions of expected regulatory benefits. Nevertheless, the agencies indicated in many of these rules that the value of the expected benefits, if monetized, would exceed or "justify" the costs. For example, see the following:

A January 11, 2010, rule issued by the Securities and Exchange Commission (SEC) amended the custody and recordkeeping rules under the Investment Advisers Act of 1940 and related forms by providing additional safeguards when a registered adviser has custody of client funds or securities. The SEC estimated the aggregate compliance costs at more than $126 million; it said the non-monetized benefits would be "substantial," and would include increasing investors' confidence when obtaining advisory services from registered investment advisers, which could lead to more efficient allocation of investor assets and an increase in the availability of capital. An April 14, 2010, FDA rule amended the agency's regulations on the use of ozone-depleting substances in self-pressurized containers to remove the essential-use designations for certain substances used in oral pressurized metered-dose inhalers (MDIs). As a result, the agency estimated that private, third-party, and public expenditures on inhaled medicines would increase by roughly $90 million to $280 million per year. FDA characterized the benefits as "environmental and public health improvements from protecting stratospheric ozone by reducing chlorofluorocarbons (CFCs) emissions" and "expectations of increased return on investments in environmentally friendly technology." An October 29, 2010, ED rule amended the agency's regulations under certain programs (e.g., the Federal Family Education Loan (FFEL) Program, the William D. Ford Federal Direct Loan Program, and the Federal Pell Grant Program) to improve the integrity in these programs. The department indicated that annual paperwork-related costs could exceed $100 million, but provided only qualitative descriptions of the expected benefits (e.g., "updated administrative structures for federal student aid programs," and "enhanced reliability and security of ability-to-benefit tests"). Nevertheless, ED stated in the rule that it believed "that the benefits of these regulations for students, consumers, and taxpayers justify the burdens of institutional compliance."

Rules Expected to Result in Major Increases in Costs or Prices

Seventeen of the 100 major rules published in calendar year 2010 appeared to be "major rules" at least in part because they were expected to result in "major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions." CRS included rules in this category (instead of the earlier category of rules with a $100 million annual "effect on the economy") if those costs were either not monetized, or if they were estimated to be less than $100 million in any year. For example, see the following:

A February 17, 2010, rule issued by the Agricultural Marketing Service (AMS) within USDA amended livestock and related provisions of the national organic program's regulations. The rule generally requires that producers maintain ruminant slaughter stock on pasture for each day that the finishing period corresponds with the grazing season for the geographical location. AMS did not monetize the benefits or the costs of the rule, but said that the benefits of the rule include uniformity in application to the livestock regulations especially as they relate to the pasturing of ruminants, which should result in a near elimination of violations of the pasture regulations. The agency said that the costs of the rule include an increase in the cost of production for producers who currently do not pasture their ruminant animals and those producers who do not manage their pastures at a sufficient level to provide at least 30% dry matter intake. AMS also said there may be an increase in consumer prices, but did not estimate the size of those increases. A July 14, 2010, SEC rule addressed "pay to play" practices in investment advising, and prohibited an investment adviser from providing advisory services for compensation to a government client for two years after the adviser or certain of its executives or employees make a contribution to certain elected officials or candidates. The rule also prohibited an adviser from providing payment to any third party for a solicitation of advisory business from any government entity on behalf of such adviser, unless such third parties are registered broker-dealers or registered investment advisers. The SEC said that advisers with government clients would incur costs to monitor contributions and establish compliance procedures, and estimated initial compliance costs of approximately $2,352 per smaller firm, $29,407 per medium firm, and $58,813 per larger firm. The commission also estimated that the rule would impose annual, ongoing compliance expenses of approximately $2,940 per smaller firm, $117,625 per medium firm, and $235,250 per larger firm. In addition, the commission estimated that advisers will incur an aggregate cost of approximately $200,246 per year and the non-labor costs of $20,080,000. The SEC did not monetize the expected benefits of the rule, but said it should (among other things) help minimize or eliminate manipulation of the market for advisory services to state and local governments. A July 16, 2010, rule issued by the Employee Benefits Security Administration (EBSA) within DOL required that certain service providers to employee pension benefit plans disclose information to assist plan fiduciaries in assessing the reasonableness of contracts or arrangements, including the reasonableness of the service providers' compensation and potential conflicts of interest that may affect the service providers' performance. EBSA did not quantify the expected benefits of the rule, but said that mandatory proactive disclosure would reduce sponsor information costs, discourage harmful conflicts of interest, and enhance service value. EBSA estimated that the annual cost of this rule from 2011 to 2020 would be between $54.3 million and $58.7 million. A July 28, 2010, rule issued by the Office of the Comptroller of the Currency within the Department of the Treasury and other agencies implemented provisions of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 ( P.L. 110-289 ). The final rule required mortgage loan originators employed by national banks to register with the Nationwide Mortgage Licensing System and Registry and maintain their registration. Mortgage loan originators were also required to obtain a unique identifier through the registry that will remain with that originator, regardless of changes in employment. In addition, the rule required mortgage loan originators and national banks to provide these unique identifiers to consumers in certain circumstances, and requires national banks to adopt and follow written procedures to assure compliance with the registration requirements. Although the agencies indicated that these requirements would impose certain regulatory costs, they did not provide monetized estimates of those costs in the rule.

"Major Rules" in Other Years

To determine whether our conclusions regarding major rules published during calendar year 2010 were consistent with other years and perspectives, CRS also examined the most recent edition of OMB's reports to Congress on the benefits and costs of federal regulations. OMB prepares these reports in accordance with the "Regulatory Right-to-Know Act," which requires the agency to identify the total annual benefits and costs of federal rules in the aggregate, by agency and agency program, and by "major rule." Although the act does not define the term "major rule," OMB has defined it as any rule (1) meeting the definition in the CRA (5 U.S.C. §804(2), (2) meeting the analysis threshold in the Unfunded Mandates Reform Act (2 U.S.C. §1532), or (3) designated as "economically significant" under Section 3(f) of Executive Order 12866. These three definitions overlap considerably, and any rule meeting the CRA definition is likely to be covered by the other two.

According to the most recent "Regulatory Right-to-Know" report, which was issued in July 2010, OMB said that it concluded review of 66 major final rules during the 12-month period beginning October 1, 2008, and ending September 30, 2009. Under Executive Order 12866, OMB does not review rules that are issued by independent regulatory agencies like the SEC and the NRC. However, OMB said that it used information from GAO's CRA database, and reported that independent regulatory agencies issued another 11 major final rules during this one-year period, bringing the total number of major rules discussed in the OMB report to 77.

Transfer Rules

OMB categorized 33 of the 77 major rules as "transfer rules" implementing federal budgetary programs, which OMB said primarily caused income transfers from taxpayers to program beneficiaries. In 22 of the 33 transfer rules, the agencies provided estimates of only the transfers themselves, which were almost always more than $100 million. In the other 11 transfer rules, the agencies provided no estimates of costs, benefits, or transfers, but OMB nonetheless categorized them as major rules. OMB reported that three other rules had transfer estimates of more than $100 million, with cost and benefits estimates that were always less than $100 million. Therefore, although OMB did not categorize these three rules as "transfers," a total of 36 rules (46.8% of the 77 rules) could be viewed as "major rules" either because of their OMB categorization as transfers, or because of the size of the transfers involved.

In three DOI/FWS migratory bird hunting rules, the agency only estimated the economic benefit (i.e., "consumer surplus") of the rules, all of which were more than $100 million. In 15 other major rules, the agencies provided monetary estimates of only regulatory costs. However, in 5 of these 15 rules, the estimates of regulatory costs were less than $100 million, and in 5 other rules issued by independent regulatory agencies, OMB did not report the size of the cost estimates. In 9 other major rules (including 7 of the 11 rules issued by independent regulatory agencies), the agencies provided no monetized estimates of benefits or costs.

In 15 of the remaining 16 rules, OMB provided monetized estimates of both benefits and costs. In 3 of these 15 rules, only the estimated benefits approached or exceeded $100 million. In contrast, none of the 15 rules had regulatory costs of at least $100 million that did not also have regulatory benefits at that level. In 12 of these 15 rules, the mid-point of the benefits estimate was greater than the mid-point of the cost estimate. Even when using the highest estimate of costs and the lowest estimates of benefits, 8 of the 15 rules were expected to produce positive net benefits. Alternatively, using the highest estimate of benefits and the lowest estimate of cost, all 15 rules were expected to produce positive net benefits.

These results regarding major rules issued during calendar years 2008 and 2009 appear to be consistent with our analysis of major rules issued during calendar year 2010. That is, rules seem to be considered "major" for a variety of reasons. The most common reason why OMB considered rules "major" was because of the transfer of federal funds, not because of the agencies' estimates of regulatory costs or benefits. Where rules appeared to be "major" because of estimated costs or benefits, the size of the estimated benefits was often larger.

Concluding Observations

The REINS Act, like the Congressional Review Act that it seeks to amend, is an attempt to reestablish a measure of congressional authority over agency rulemaking. The bill's supporters have asserted that the number of "major rules" that impose at least $100 million in annual costs on regulated entities has grown significantly in recent years. Because all agency rulemaking authority is delegated from Congress, supporters of the REINS Act assert that it is appropriate for Congress to vote on whether or not these major rules should take effect.

Number of Rules and Why Considered "Major"

While supporters and opponents of the REINS Act can vigorously debate the merits of a congressional approval process as contemplated in the legislation, the factual underpinnings of that debate should be as clear and agreed upon as possible. However, there appear to be some misconceptions regarding the number of major rules that have been issued in recent years, and why those rules were considered "major."

Several observers have said that the number of rules, and the number of major rules, has increased sharply during the Obama Administration. An editorial in the Wall Street Journal stated that federal agencies had issued 59 major final rules in 2009 and 62 in 2010, up from an average of between 30 and 40 major rules in the previous 25 years. However, GAO's federal rules database indicates that the number of major final rules has been at or above 50 in every full calendar year since the CRA was enacted in March 1996, and the number of major rules first exceeded 80 during the last calendar year of the George W. Bush Administration, when federal agencies issued 95 major rules. The number of major rules fell somewhat in 2009, the first year of the Obama Administration (to 84), but 11 of those rules appear to have been issued during the final days of the Bush Administration. In 2010, federal agencies published 100 major rules.

Also, although several observers have indicated that all major rules have annual costs of at least $100 million, this report indicates that the major rules published in recent years appeared to be "major" for a variety of reasons. Many of the rules seemed to have been placed in that category because they substantially increased or decreased federal transfer payments—not because of expected regulatory compliance costs or benefits. Some observers may contend that at least some of these transfers are, in fact, regulatory costs (e.g., system-wide increases in the cost of health insurance, with the benefits flowing primarily from one group to another). Even under this view, however, those costs are somewhat different than compliance costs that are imposed upon particular industries or groups.

Of the major rules that had annual compliance cost estimates of $100 million or more, the rules frequently had estimated benefits that were much higher. In fact, in 14 of the major rules that were published in calendar year 2010, the agencies' highest estimated compliance costs were less than the lowest estimated benefits. In contrast, only one rule had estimated benefits that were lower than the lowest estimated costs (the DOT rule on "positive train control systems"), and in that rule the agency indicated that the costs were driven by the specific requirements in the underlying statute. In many other rules, the agencies provided monetized estimates of regulatory costs, but provided only qualitative descriptions of expected regulatory benefits. Other rules were expected to result in increased costs or prices, but the estimates for those increases were either less than $100 million or were not monetized.

Congressional Oversight

Although the reasons why certain rules are considered major appear to be more varied than just compliance costs, that fact does not bring into question the appropriateness of congressional oversight of agency regulations, or the appropriateness of considering the type of congressional approval process contemplated by the REINS Act. For example, see the following:

If a major rule is expected to increase or decrease federal transfer payments by more than $100 million, Congress may want to examine and/or approve the manner in which those regulatory transfers are constructed to ensure that they are consistent with the intent of the underlying statute, and that they are sustainable in the current budgetary environment. If a major rule is expected to result in additional fee revenue, Congress may want to ensure that the fee structure is appropriate, and that the amount of fees expected to be derived from the regulatory change is neither too high nor too low to cover the costs of the governmental function being funded. If an agency indicates that a major rule is expected to result in regulatory costs that are substantially greater than the expected benefits (as appears to be the case in the "positive train control systems" rule), Congress may want to examine those estimates more closely, and may ultimately decide to prevent the rule from taking effect. Congress may also want to examine whether (as DOT indicated in the positive train control systems rule) the requirements in the underlying statute are, in fact, the source of the negative net benefits. On the other hand, if an agency indicates that a rule is expected to produce regulatory benefits well in excess of its expected costs, Congress may want to question the accuracy of those estimated benefits and costs. If Congress concludes that a rule will cost much more than the agency estimated, or will yield much lower estimated benefits, then Congress may decide not to approve the rule.

To carry out these kinds of congressional oversight actions, either as part of a disapproval action under the CRA, or as part of an approval action under the REINS Act, Congress may need particular types of expertise. For example, to determine whether a CMS rule has properly established prospective payment systems for hospitals and doctors, Congress may want to consult with experts in how such systems are constructed and operate. To determine whether EPA has properly estimated the future benefits of a rule, Congress may want to consult with experts in risk analysis to determine whether certain health benefits are likely to materialize. H.R. 214 (112 th Congress), if enacted, may help provide some of the expertise that may be needed. The bill would create a Congressional Office of Regulatory Analysis (CORA), transferring to the director of that office the Comptroller General's responsibilities under the CRA. The CORA director would be required to prepare a report on each major rule, including potential benefits and costs and an analysis of less costly alternatives. In carrying out these and other functions, the director is permitted to procure temporary experts and consultants.

Statutory Requirements

In some cases, the agency issuing the rule appeared to have little or no discretion in determining whether or not the rule would be a "major rule." For example, see the following:

DOE said the January 25, 2005, rule on weatherization assistance for low income persons was "major" because of the $5 billion in grants provided by the American Recovery and Reinvestment Act of 2009. DOD said its April 16, 2010, rule on retroactive stop loss special pay to members of the military service was "major" because of the more than $534 million authorized and appropriated for that purpose in the Supplemental Appropriations Act, 2009. The NRC said its June 16, 2010, was "major" because the Omnibus Budget Reconciliation Act of 1990, as amended, generally requires the agency to recover through fees approximately 90% of its FY2010 budget authority through fees (about $900 million).

If a major rule that is of congressional concern is simply implementing statutory requirements, and the statute requires recurring rules, Congress may want to revisit those statutory requirements to prevent future major rules with the same types of effects.

Specificity of Statutory Rulemaking Authority

Finally, some observers have asserted that one way to prevent burdensome federal regulations is for Congress to be more specific in the statutes underlying those rules. Congress can assign regulatory responsibilities to federal agencies in any number of ways, and the manner in which Congress does so can determine the amount of discretion given to the agencies and, conversely, the amount of control that Congress retains for itself. When Congress requires that a regulation be issued or made effective by a particular date, that it contain certain substantive elements, and that the rule be developed following certain procedures, then the delegation of legislative rulemaking authority is somewhat limited and Congress retains a measure of control over the subsequent policymaking process.

However, specificity in the statutes underlying agency rules can also constrain the agencies from developing regulations that are most cost effective. For example, the Federal Railroad Administration rule on "positive train control systems" was the only major rule issued in 2010 that was clearly expected to produce negative net benefits. The agency said that the expected costs of the rule were about 20 times the expected benefits. FRA noted this imbalance in the rule, but said it was "constrained by the requirements of [the Rail Safety Improvement Act of 2008], which do not provide latitude for implementing [positive train controls] differently."

Appendix. "Major Rules" from Calendar Year 2010