Federal Rulemaking: OMB Should Work with Agencies to Improve Congressional Review Act Compliance during and at the End of Presidents' Terms
Released: 2018-03-13T00:00:00

Letter

Background

Federal agencies implement specific elements of laws through regulations, which typically require or prohibit certain actions. Congresses and Presidents have required agencies to comply with multiple procedural and analytical requirements prior to issuing regulations.

Administrative Procedure Act (APA). APA established the basic framework of administrative law governing federal agency action, including rulemaking. Before promulgating a regulation, agencies are generally required to publish a notice of proposed rulemaking (NPRM) in the Federal Register and take comments concerning the proposed rule. However, agencies may issue final rules without the use of an NPRM in certain cases, including when the agency determines for “good cause” that notice and comment procedures are “impracticable, unnecessary, or contrary to the public interest.” Further, Congress sometimes enacts laws that direct an agency to issue regulations without notice and comment.

Regulatory Flexibility Act. RFA was enacted in response to concerns about the effect that federal regulations can have on small entities. RFA requires agencies to consider the impact of their regulations on small entities and to prepare regulatory flexibility analyses, unless the head of the agency certifies that the rule would not have a “significant economic impact upon a substantial number of small entities.”

Paperwork Reduction Act. PRA was enacted to help minimize the burden that federal information collections (e.g., forms, surveys, or questionnaires) impose on the public, while maximizing their public benefit. PRA requires agencies to provide public notice, solicit comments, and request approval by OMB before imposing new information collection requirements.

Unfunded Mandates Reform Act of 1995. UMRA was enacted to address concerns about federal statutes and regulations that require nonfederal parties to expend resources to achieve legislative goals without being provided funding to cover the costs. Among other things, UMRA generally requires federal agencies to prepare a written statement containing a “qualitative and quantitative assessment of the anticipated costs and benefits” for any rule that includes a federal mandate that may result in the expenditure of $100 million or more in any 1 year by state, local, and tribal governments in the aggregate, or by the private sector.

Small Business Regulatory Enforcement Fairness Act. Under SBREFA, the Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA) are required to convene Small Business Review Panels (also known as SBREFA panels) for rulemaking efforts that are expected to have a significant economic impact on a substantial number of small entities. These panels are intended to seek direct input early in the rulemaking process from small entities that would be impacted by the rulemakings.

Congressional Review Act. CRA was enacted to better ensure that Congress has an opportunity to review and possibly disapprove regulations, in certain cases, before they become effective. CRA established expedited procedures by which Congress may disapprove agencies’ regulations by introducing a resolution of disapproval that, if adopted by both Houses of Congress and signed by the President, can nullify an agency’s action. CRA states that an agency may not reissue the regulation in “substantially the same form,” as a regulation Congress disapproved. CRA requires us to provide Congress with a report on rules OMB’s Office of Information and Regulatory Affairs (OIRA) determines to be major rules, including our assessment of the issuing agency’s compliance with the procedural steps required by various acts and executive orders governing the rulemaking process. CRA’s definition of a major rule is similar to E.O. 12866’s definition of economically significant rules, and generally, economically significant regulations are classified for purposes of CRA as major rules and significant regulations are classified as nonmajor rules. CRA generally provides Congress time to review major rules before those rules take effect.

Executive Orders and Relevant Guidance. In addition to the statutory requirements described above, executive agencies must also follow requirements Presidents have set in executive orders and related guidance:

Role of OIRA: Under E.O. 12866, issued in 1993, OIRA reviews regulations deemed significant. The Administrator of OIRA is responsible for providing meaningful guidance and oversight with respect to regulatory planning and review to the extent permitted by law. Further, the order states that OIRA is to be the repository of expertise concerning regulatory issues.

Role of agencies and assessment of costs and benefits: Among other things, under E.O. 12866 agencies are responsible for developing regulations and assuring that the regulations are consistent with applicable law. The order also requires agencies to prepare an agenda of all regulations under development or review. For economically significant regulations, E.O. 12866 requires agencies to provide to OIRA (unless prohibited by law) an assessment, including the underlying analysis, of the costs and benefits anticipated from the regulatory action and feasible alternatives. For significant regulations, E.O. 12866 requires agencies to provide to OIRA an assessment of the potential costs and benefits anticipated from the planned regulatory action. Circular A-4, published in 2003, provides guidance to agencies on how to conduct the required analysis and, among other things, directs agencies to estimate the costs and benefits of a regulation and “transfer” payments that may result from the regulation. Transfer regulations redistribute income from (usually) taxpayers to program beneficiaries (e.g., Medicare recipients), but generally do not result in economic benefits or costs.

Agencies Published More Final Regulations and More Frequently Provided Advanced Notice to the Public during Transition Periods

The three administrations published a higher number of economically significant and significant final regulations at the end of each President’s second term compared to the nontransition periods. (See figures 1 and 2.) The administrations published on average roughly 2.5 times more economically significant regulations during their transition periods than during nontransition periods.

Our analysis also showed that within their transition periods (September 23 through January 20), the administrations of Presidents Clinton and Obama increased their rate of economically significant rulemaking following the elections held in 2000 and 2016 (between Election Day in November and January 20), while President Bush’s administration decreased the rate of economically significant rulemaking following the 2008 election. (See appendix II.)

Economically Significant Regulations Published in Both Transition and Nontransition Periods Were Concentrated in Certain Agencies

We found that the majority of economically significant regulations were published by a subset of agencies across the three administrations and between transition and nontransition periods. In particular, the Department of Health and Human Services (HHS) published one-third of the economically significant regulations we reviewed across all periods and was the most active agency in both transition and nontransition periods. (See table 1.) For example, the Centers for Medicare & Medicaid Services typically published regulations every calendar year describing reimbursement rates for medical providers serving Medicare patients.

For significant regulations, HHS was the most active agency during both transition and nontransition periods. (See table 2.) However, significant rulemaking was less concentrated in a subset of agencies than was economically significant rulemaking. Specifically, five of the agencies that published the largest number of economically significant regulations accounted for between 65 and 70 percent of these regulations during both transition and nontransition periods, while the five agencies that published the largest number of significant regulations accounted for 42 percent of these regulations during both transition and nontransition periods.

For Economically Significant Regulations, Agencies More Frequently Provided Advanced Notice to the Public during Transition Periods

To provide perspective on the transparency of regulatory activity and the types of rulemaking procedures agencies used during transitions, we examined two indicators: 1) whether regulations were advertised in the previous spring’s Unified Agenda and 2) whether the final regulation was preceded by a proposed rule or NPRM:

Prior Appearance in the Unified Agenda: The semi-annual Unified Agenda was established by E.O. 12866 and provides uniform reporting of data on those regulatory and deregulatory activities under development or review throughout the federal government. By including a planned regulation in the previous spring’s Unified Agenda, policy makers provided members of the public with several months of notice before a final regulation was published during any of the transition or nontransition periods.

Notice of Proposed Rulemaking: The notice and comment process was established by the APA and gives the public an opportunity to provide information to agencies on the potential effects of a regulation or to suggest alternatives for agencies to consider before the agency publishes the final regulation. By publishing an NPRM, policy makers provided members of the public with an opportunity to influence the development of the regulation.

Overall, we found that agencies more frequently provided advanced notice of regulations to the public during transition periods by announcing planned activities in the Unified Agenda and publishing NPRMs. A higher percentage of economically significant regulations appeared in the previous spring’s Unified Agenda during Presidents Bush’s and Obama’s transition periods compared to nontransition periods. (See figure 3.) President Clinton’s administration published a smaller percentage of regulations in the Unified Agenda during its transition period compared to its nontransition periods. This decrease is explained by the Department of the Interior (Interior) and HHS not entering four regulations they typically update each year into the spring 2000 Unified Agenda pertaining to migratory bird hunting and Medicare.

For significant regulations, we estimate that a higher percentage of regulations published during Presidents Bush’s and Obama’s transition periods appeared in the previous spring’s Unified Agenda compared to President Clinton’s transition period. However, we found no statistical differences between the nontransition periods combined and any of the three transition periods. (See figure 4.)

Across all three administrations, economically significant regulations published during transition periods were more often preceded by proposed regulations compared with those published during nontransition periods. (See figure 5.)

We estimated that significant regulations published during Presidents Clinton’s and Bush’s transition periods were more often preceded by proposed regulations than significant regulations published during nontransition periods. However, we found no statistical differences between President Obama’s transition period and the other transition and nontransition periods. (See figure 6.)

Nearly All Economically Significant Regulations Reported to the Public Compliance with Four Procedural Requirements, but a Quarter Did Not Comply with the Congressional Review Act

Agencies Reported to the Public that They Complied with Four Procedural Requirements for Nearly All Economically Significant Regulations and the Majority of Significant Regulations

Regulatory Flexibility Act (RFA), Paperwork Reduction Act (PRA), and the Unfunded Mandates Reform Act of 1995 (UMRA): We found that 91 percent of economically significant regulations across all periods reviewed explained to the public the determinations the agencies made regarding these three procedural requirements. Further, there was little difference between transition and nontransition periods in whether agencies provided explanation of these three procedural requirements. For the regulations that did contain explanation, agencies indicated that more economically significant regulations published during transition periods than in nontransition periods: (1) would not have a significant impact on a substantial number of small entities (RFA), (2) contained information collection requirements on nonfederal entities (PRA), and (3) generally could impose federal mandates on nonfederal entities (UMRA). For significant regulations, we estimate that 64 percent across all periods reviewed provided explanation to the public of the determinations the agencies made regarding these three procedural requirements. More specific information about the determinations agencies reached is presented in appendix II.

For economically significant and significant regulations that did not contain explanations of one or more of these procedural requirements, this does not necessarily indicate noncompliance by the agency. An agency may not need to address a particular procedural requirement if the substance of the rule or exceptions and thresholds in the requirement lead the agency to determine that a specific regulation did not trigger the requirement. For example, regulations that were significant but not economically significant under E.O. 12866 would not be expected to contain a federal mandate that would result in the expenditure of $100 million or more in any 1 year, so would not trigger the requirement for an UMRA written statement.

Small Business Regulatory Enforcement Fairness Act (SBREFA): EPA and OSHA reported holding small business review panels for 16 economically significant regulations reviewed, and we confirmed that the proceedings of all but one of these panels had been documented on the Small Business Administration’s website. EPA also reported holding a small business review panel for one of the significant regulations we reviewed, and we confirmed that this proceeding also had been documented.

Over 25 Percent of Economically Significant Regulations and an Estimated 15 Percent of Significant Regulations Did Not Comply with the Congressional Review Act

CRA requires agencies to submit regulations to Congress and to us and to delay the effective date of certain regulations in order to provide Congress an opportunity to review and possibly disapprove of regulations before they become effective. We reviewed agencies’ compliance with the requirements to: (1) submit the regulation to Congress and to us, (2) provide the required delay between submission of the regulation to Congress and us and its effective date, and (3) provide the required delay between publication of the regulation and its effective date. See figure 7 for these requirements regarding delays in effective dates.

Our analysis determined that 132 of the 527 economically significant regulations across all periods reviewed failed to meet at least one of the requirements described above, and none of these regulations included agencies claiming “good cause,” which would have allowed them to delay the effective date. (See figure 8.)

We found that noncompliance for economically significant regulations was primarily associated with agencies’ failure to delay the effective date of their regulations, while the failure to submit regulations to Congress and us accounted for a smaller proportion of the deficiencies. Of the 132 noncompliant economically significant regulations:

95 did not provide the required delay between the submission of the regulation to Congress and us and the effective date. Further, agencies generally missed the deadline by more than 5 days (70 of 92 regulations). It is our practice to alert the relevant congressional committees when we observe this particular deficiency in our major rule reports. Further, we also reported to Congress in 2007 that there appeared to be a broader pattern of noncompliance with this requirement, noting: “A consistent difficulty in implementing CRA has been the failure of some agencies to delay the effective date of major rules for 60 days as required by CRA.”

74 did not provide the required delay between publication in the Federal Register and the effective date. Once again, agencies generally missed this deadline by more than 5 days (62 of 74 regulations). It is our practice to alert the relevant congressional committees when we observe this particular deficiency in our major rule reports.

10 had not been submitted to us as of November 13, 2017.

Among the most active regulatory agencies for economically significant regulations, HHS and the Department of Transportation (Transportation) had higher rates of noncompliance than the government-wide percentages for both the transition and nontransition periods we reviewed. (See table 10 in appendix II.) However, noncompliance was not limited to HHS and Transportation; 17 of the 23 agencies that published economically significant regulations during the periods we reviewed had at least one noncompliant regulation. As noted previously, our sample of significant regulations was not designed to provide estimates concerning individual agencies’ noncompliance with CRA.

In addition, we estimate that 15 percent of significant regulations published across all periods reviewed failed to meet at least one of the CRA requirements we reviewed. (See figure 9.) We did not identify any statistical differences in the noncompliance rate among the three transition periods and nontransition periods combined.

For significant regulations, we developed estimates for the following CRA deficiencies:

Regulations submitted after the stated effective date: An estimated 15 percent of significant regulations published during all periods reviewed were not submitted to Congress and us before the stated effective date as required. Significant regulations were generally nonmajor rules, which do not have a requirement to delay the effective date by 60 days. There were no statistical differences among the three transition periods and the nontransition periods regarding this deficiency.

Regulations not submitted to us: An estimated 7 percent of significant regulations published during all periods reviewed had not been submitted to us as of November 17, 2017, with no statistical differences among the three transition periods and nontransition periods.

Agencies’ noncompliance with CRA has the overall effect of making it more difficult for Congress to exercise its oversight role under CRA; however, the precise effects of noncompliance depend on the type of regulation and the specific deficiencies. CRA provides expedited procedures that make it easier to overturn a regulation compared to following the regular legislative process. For economically significant regulations, which are generally classified as major rules under CRA, failing to provide the required delay for congressional review means that Congress has a shorter amount of time to use these expedited procedures to disapprove the regulation before the agency potentially starts enforcement actions. Furthermore, in general, if a rule is not submitted to Congress as required by CRA, Congress cannot use these expedited procedures. Moreover, not submitting a rule to Congress can potentially create legal uncertainty for agencies and regulated parties because courts have differed on the impact of noncompliance with CRA on the enforceability of the regulation.

OIRA staff noted that CRA states that agencies are responsible for complying with the act’s requirements, and E.O. 12866 states that agencies are responsible for adhering to applicable laws. However under E.O. 12866, OIRA is also responsible for oversight of agencies’ rulemaking, consistent with law, and reviews regulations before publication, which provides it an opportunity to identify and help agencies avoid potential noncompliance. OIRA staff asserted that they already take steps to check agencies’ compliance with CRA. However, we found that OIRA completed its E.O. 12866 reviews for 110 of the 132 noncompliant economically significant regulations within 90 days of the stated effective date. OIRA staff noted that they cannot monitor every action agencies take following their review of draft final regulations, such as the specific date a regulation is published in the Federal Register or whether an agency submits a copy of the regulation to Congress or us. However, because economically significant regulations are generally classified as major rules under CRA, this indicates that OIRA frequently completes its review in close proximity to the start of the 60-day period intended for congressional review, and in such cases the regulation is at high risk of noncompliance with CRA.

This close proximity to the 60-day period provides an opportunity for OIRA to identify potentially noncompliant regulations before agencies publish them and work with agencies on actions that would avoid noncompliance. Our analysis identified such actions agencies could use to comply with CRA. For example, we found instances of agencies explaining to the public that CRA requires a 60-day review period for major rules and therefore identifying an effective date more than 2 months after publication in the Federal Register. In other instances, agencies stated that the regulation would take effect 60 days after publication in the Federal Register, which ensures compliance with CRA provided that the regulation is submitted to Congress and us on or before the day it is published. In other cases, agencies stated they had “good cause,” to not delay the effective delay, such as a statutory or judicial deadline or an emergency situation.

Variations Existed between Transition and Nontransition Periods in Agencies’ Anticipated Types of Economic Effects for Economically Significant Regulations

Agencies anticipated that economically significant regulations published during transition periods were more likely to result in economic costs and benefits and generally less likely to result in “transfers” of income from taxpayers to program beneficiaries. To identify the types of economic effects that agencies anticipated, we placed the 527 economically significant regulations reviewed across all periods into one of four categories based on information agencies provided in the published regulation concerning the anticipated costs, benefits, or transfers resulting from a regulation:

Expected economic costs, benefits, or both: For 197 of the 527 economically significant regulations (or 37 percent), agencies expected costs or benefits or both to result and made no mention of transfers. Our previous work has noted that regulations typically require a desired action or prohibit certain actions by regulated parties. Such requirements may impose costs on private-sector parties, such as businesses and individuals, and may also provide benefits to society as a whole. Examples we reviewed included EPA regulations limiting emissions from industrial facilities with the goal of improving air quality and Labor Department regulations intended to improve workplace safety.

Transfers: For 184 of the 527 economically significant regulations (or 35 percent), agencies expected transfers to result from the regulation and made no mention of either costs or benefits. Examples we reviewed included HHS regulations stating how much Medicare will reimburse Medicare providers and Department of Agriculture regulations providing disaster assistance to farmers. While these payments increase the incomes of Medicare providers and farmers, Circular A-4 directs agencies to avoid misclassifying these transfers as economic costs or benefits because they do not change aggregate social welfare.

Combination of economic costs, benefits, or transfers: For 108 of the 527 economically significant regulations (or 20 percent), agencies expected costs or benefits or both to occur and also expected transfers to occur. Examples we reviewed included regulations that expanded access to health insurance for tribal employees and established paid sick leave for federal contractors that were anticipated to result in both administrative costs and transfers.

No economic analysis: The remaining 38 of the 527 economically significant regulations (or 7 percent) provided no economic analysis. Of these regulations, 22 were updates to migratory bird hunting regulations Interior published during Presidents Clinton’s Administration and President Bush’s first term. During the 2003-2004 nontransition period of President Bush’s Administration, Interior began providing a brief summary of the economic effects anticipated to result from hunting these birds.

Comparing these reported effects between transition and nontransition periods, we found that agencies indicated that economically significant regulations published during transition periods were more likely to result in costs and benefits to society than those published during nontransition periods across all three administrations. (See figure 10.) In contrast, regulations involving only transfers became a smaller proportion of the economically significant regulations published during Presidents Bush’s and Obama’s transition periods. Regulations that involved various combinations of costs, benefits, and transfers became a larger proportion of regulations published during Presidents Bush and Obama’s transition periods and overall became a larger proportion of economically significant regulatory activity that occurred during President Obama’s transition period.

Executive guidance encourages agencies to quantify and monetize expected costs and benefits to help decision makers understand the consequences of regulatory approaches. E.O. 12866 states that for economically significant regulations agencies should analyze costs and benefits to the extent feasible, and Circular A-4 encourages agencies, to the extent possible, to provide monetized estimates of these costs and benefits. For economically significant regulations, we found that agencies were more likely to monetize anticipated costs and transfers compared to benefits and were more likely to monetize anticipated costs during Presidents Clinton and Bush’s transition periods. (See figures 11-13.) For economically significant regulations, we also did additional analysis of the extent to which agencies anticipated the benefits would justify the costs and the extent to which net costs or benefits were calculated. (See appendix II.)

In examining the extent to which agencies anticipated that costs, benefits, and transfers would result from significant regulations, we found that an estimated 57 percent across all periods reviewed provided information on the anticipated costs, benefits, transfers, or some combination of these, with no statistical differences among the three transition periods and the nontransition periods combined. An estimated 43 percent of significant regulations across all periods reviewed did not include any information on the anticipated costs, benefits, transfers, or some combination of these, with no statistical differences among the three transition periods and the nontransition periods combined.

Conclusions

Although we confirmed that agencies published a larger number of regulations during transition periods than during the same months in nontransition periods, the variety of other indicators we examined generally suggest that there were few significant differences—other than their numbers—when comparing regulations published during the three transitions to each other and to those published during nontransition periods. Among the few exceptions, economically significant regulations published during the transition periods were more likely to have provided advanced notice to the public and more likely to result in private sector costs and potential benefits to society.

However, agencies’ noncompliance with the requirements of CRA for economically significant regulations (major rules under CRA) grew worse over time. Under CRA, agencies must allow additional time for Congress to review these most impactful regulations before they take effect unless the agency claims good cause for not delaying the effective date. Our review did highlight a potential opportunity for OIRA to work with agencies to improve CRA compliance going forward. Specifically, OIRA staff have the unique opportunity to work with agencies before economically significant regulations and regulations deemed significant for other reasons are published in final form in the Federal Register. OIRA staff should use this opportunity to identify economically significant regulations whose planned effective dates appear at risk of not providing Congress with sufficient time to review the regulation.

To do this, our analysis points to a simple “rule of thumb” OIRA reviewers could use. If an agency is planning to make an economically significant regulation effective in less than 3 months from the time OIRA is completing its review, OIRA staff should discuss with agency officials strategies for ensuring compliance with CRA. These could include delaying the planned effective date, stating in the submission to the Federal Register that the regulation will go into effect 60 days after publication and ensuring prompt submission to Congress and us, or discussing whether the agency has a reasonable basis to claim “good cause” for not delaying the effective date and ensuring that the use of “good cause” is clearly explained in the regulation. Ensuring that agencies consistently provide Congress with the required time to review, and possibly disapprove regulations, is important throughout a President’s term, and particularly following a presidential transition when Congress typically has a larger number of regulations to potentially review.

Recommendation for Executive Action

We are making the following recommendation to the Director of OMB:

The Director of OMB should ensure that OIRA’s staff, as part of the regulatory review process, examine the planned timeframes for implementing economically significant regulations or major rules and identify regulations that appear at potential risk of not complying with the Congressional Review Act’s delay requirements and then work with the agencies to ensure compliance with these requirements (Recommendation 1).

Agency Comments and Our Evaluation

We provided a draft of this report to the Director of OMB on January 18, 2018. In oral comments received on February 22, 2018, staff from OIRA and the Office of General Counsel discussed the findings, conclusions, and recommendation. OMB staff did not agree or disagree with our recommendation. However, they identified some concerns regarding the recommendation to improve agencies’ compliance with CRA. They noted that: (1) CRA states that agencies are responsible for complying with the act’s delay and submission requirements; (2) agencies determine when their regulations will take effect and when they submit the regulations to Congress and us, neither of which OMB has direct control over; and (3) where OMB does exercise authority—the regulatory review process under E.O. 12866—OIRA staff already take steps to check agencies’ compliance with CRA, and they do not see what more they could do to improve agencies’ compliance with the act. The staff also provided technical comments that were incorporated as appropriate.

Regarding the first two concerns raised by OIRA staff, we believe our report sufficiently recognizes agencies’ responsibilities under CRA. Regarding the third concern, we disagree that OMB has done all that it can to improve compliance with CRA. As noted above, OMB staff asserted that they do take steps to check for CRA compliance, and these checks could provide a starting point for OMB to address our recommendation. However, our analysis raises questions about how effective these checks have been. OIRA completed its review for 110 of the 132 noncompliant economically significant regulations within 90 days of the stated effective date. This analysis points to a simple “rule of thumb” for OIRA reviewers to use. If a regulation has a planned effective date in less than 90 days, it is at high risk of noncompliance with CRA. Further, our report identifies three specific strategies OIRA staff could discuss with agency officials on how to comply with CRA. Thus, we believe that our report shows that OMB could do more to ensure CRA compliance and identifies specific ways OMB could help agencies accomplish this.

We are sending copies of this report to the Director of OMB as well as appropriate congressional committees and other interested parties. In addition, this report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff members have any questions about this report, please contact me at (202) 512-6806 or krauseh@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 III.

Appendix I: Objectives, Scope, and Methodology

Section 5 of the Edward “Ted” Kaufman and Michael Leavitt Presidential Transitions Improvements Act of 2015 includes a provision for us to assess final significant regulatory actions promulgated by executive departments during specified presidential transition periods and to analyze and compare multiple characteristics of regulations issued during these transition periods to each other and to regulations issued during the same 120-day period (September 23 to January 20) in nontransition years since 1996. The transition periods identified in the act are those ending on January 20 in 2001, 2009, and 2017, which occurred at the end of the administrations of Presidents Clinton, Bush, and Obama.

For purposes of this review, executive agencies are cabinet departments and other agencies that answer directly to the President and exclude the independent regulatory agencies. The definition of what the mandate refers to as a “covered regulation” is the same as the definition of a final significant regulatory action under Executive Order (E.O.) 12866. Under E.O. 12866, the Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs (OIRA) reviews significant proposed and final regulatory actions from all federal agencies (other than independent regulatory agencies) before they are published in the Federal Register. The order defines significant regulatory actions as those that are likely to result in a regulation that may: 1. Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities (generally referred to as “economically significant” regulations); 2. Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; 3. Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or 4. Raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in the executive order.

For each of the three transition periods, and among these transition periods and the same 120-day periods in the 18 nontransition periods, our objectives were to assess the extent to which there were variations in: 1. The number of regulations and other indicators related to the scope and transparency of these regulations; 2. Agencies’ reported compliance with procedural requirements for promulgating the regulations; and 3. The anticipated economic effects agencies reported would result from the regulations.

In general, to address each of these objectives we reviewed the universe of all 527 final economically significant regulations published during the specified time periods and a generalizable stratified random sample of 358 final significant regulations from the population of the 1,633 final significant regulations published during those same periods. For economically significant regulations, we can provide precise statistics on the extent of a finding, because we reviewed the universe of final economically significant regulations. For significant regulations, our findings are based on a sample designed to achieve a 7 percent margin of error and 95 percent level of confidence for each stratum in the population of all covered significant regulations published in each transition period and, collectively, all nontransition periods. Our findings for the sample are not generalizable to the individual agencies that published those regulations. We divided the significant regulations into four strata depending on when the regulation was published: 1) the 2000- 2001 transition period; 2) the 2008-2009 transition period; 3) the 2016- 2017 transition period; and 4) all the nontransition periods consolidated into one stratum. We made two modifications to the data for each stratum before we selected our sample: 1) We added to the sampling frames additional significant regulations that we had become aware of during our review of economically significant regulations; and 2) we reviewed the sampling frames and filtered out duplicate entries. Because we followed a probability procedure based on random selections, our sample is only one of a large number of samples that we might have drawn. Since each sample could have provided different estimates, we express our confidence in the precision of our particular sample’s results as a 95 percent confidence interval (for example, plus or minus 7 percentage points). This is the interval that would contain the actual population value for 95 percent of the samples we could have drawn. Table 3 summarizes the population and sample size by stratum for significant regulations.

We primarily relied on the Reginfo.gov database on OMB’s regulatory reviews under E.O. 12866 to compile lists of final economically significant and significant regulations published during each of the transition and nontransition periods. As described in more detail below, we refined and supplemented the lists from the Reginfo.gov database with information from our database of rules submitted to us under the Congressional Review Act (CRA), and the Government Printing Office’s Federal Digital System database on the Federal Register. To test the reliability of these databases, we reviewed relevant documentation, interviewed knowledgeable agency officials, looked for missing data and outliers (for example, by identifying missing records or those included in error), traced a sample of entries to source documents, and conducted additional checks. We concluded that the data were sufficiently reliable for our purposes.

Further for all objectives and for both economically significant and significant regulations, our primary source was the text of the published regulation. However, as described below, we did sometimes supplement that information with information from other publicly available sources. We downloaded copies of published regulations from the website maintained by the Government Printing Office, which securely controls content to ensure the integrity and authenticity of the Federal Register. We used a data collection instrument to collect standardized information about individual regulations as described below. We did not evaluate the agencies’ decisions regarding procedural requirements or their determinations regarding the effects of their rules. Instead, consistent with our practice in preparing major rule reports to Congress under CRA and prior reports on federal rulemaking, we are providing information about what the agencies published in the Federal Register.

To assess the number of regulations and other variations related to the scope and transparency of these regulations, we first reviewed and refined our lists of economically significant and significant regulations published during each of the transition and nontransition periods. For economically significant regulations, we compared the initial lists compiled from Reginfo.gov against lists of major rules agencies had submitted to us under CRA to look for potential omissions. We then reviewed each of the published regulations to identify explanations agencies may have provided of a selected regulation’s classification as economically significant under E.O. 12866 to tally total numbers of economically significant regulations published during each of the time periods and the agencies publishing them. To identify economically significant regulations published annually, we looked for indications in the title or summary of the regulation and confirmed that these regulations appeared in multiple time periods reviewed. For significant regulations, we obtained data from Reginfo.gov concerning the number of regulations reportedly published and the agencies reported to have published them. We also reviewed the published regulations for explanations of the regulations’ classification under E.O. 12866. Our sample of significant regulations was not designed to make estimates for individual agencies, so we used data from Reginfo.gov instead. For both economically significant and significant final regulations, we compiled information on the rulemaking procedures used by agencies to determine whether the agencies had published a prior notice of proposed rulemaking (NPRM).

We did this by looking for discussion of a proposed regulation in the published final regulation. As necessary, we supplemented that review with information from our major rule reports, if available, and data from Reginfo.gov concerning the rulemaking history. To describe the extent to which regulations had been advertised in the previous spring’s Unified Agenda, we searched for the regulation’s identification number(s) in the online database for the Unified Agenda.

To assess the extent to which there were variations in agencies’ reported compliance with procedural requirements for promulgating the regulations, we reviewed the published text of the regulations and, for regulations that were also major rules, the major rule reports that we prepared for Congress under CRA. We reviewed agencies’ reported compliance with procedural requirements for promulgating regulations under five statutes—CRA, the Regulatory Flexibility Act (RFA), the Paperwork Reduction Act (PRA), the Unfunded Mandates Reform Act of 1995 (UMRA), and the Small Business Regulatory Enforcement Fairness Act (SBREFA)—including whether and, if so, how the agency addressed the requirement in the published regulation. To determine whether the Environmental Protection Agency and the Occupational Safety and Health Administration held the panels they were required to hold under SBREFA, we also reviewed the information on the Small Business Administration’s website summarizing these panels.

We took multiple steps to identify noncompliance with CRA. We first determined whether every regulation had been submitted to us, and for regulations that had been submitted, we recorded the date we received it. We used the date a regulation had been submitted to us when assessing whether a regulation’s stated effective date was consistent with CRA requirements. We also reviewed whether agencies had claimed “good cause” for not delaying the effective date. For regulations not submitted to us or those regulations submitted to us after they should have been submitted, we conducted additional checks of the Congressional Record to see if we could find evidence that the agency had provided a copy of the regulation to either of the Houses of Congress in time for the regulation’s stated effective date to be consistent with CRA requirements. If we could find evidence that any of these requirements had been met, we removed the regulation from further consideration as potentially noncompliant. As such, our methodology was designed to identify instances of noncompliance. Our methodology does not allow us to conclude that the remaining regulations were fully compliant. In addition, it was beyond the scope of our review to evaluate the appropriateness of agencies claiming “good cause” for not providing the required delay.

To assess the extent to which there were variations in agencies’ reported anticipated economic effects resulting from the regulations, we reviewed the published regulations to see whether they contained a section clearly identified as economic analysis or discussion of the analytical requirements concerning E.O. 12866. We used selected elements from OMB Circular A-4 to review the analyses included in the published regulations to identify expected costs, benefits, or transfers, and whether that information was provided in monetary, quantitative, or qualitative terms. To help identify regulations that involved transfers, we also reviewed the annual reports OMB prepares for Congress on the costs and benefits of federal regulations. OMB includes in these reports a list of transfer regulations and has used a consistent definition over time. We also looked for indication in the published regulation’s economic analysis that the regulation involved such topics as transfers, or federal payments to certain groups in society (for example, Medicare recipients), subsidies for certain economic activities, or user fees or royalties people pay the government to name several common examples. To determine the extent to which agencies discussed whether they expected that the benefits would justify the costs, we looked for “bottom line” or other concluding statements agencies may have provided in their economic analysis. We also looked, when relevant, for a discussion of what the net benefits or costs were expected to be. For transfer regulations that were economically significant, we examined the extent to which agencies quantified or monetized the expected transfers. If available, we used accounting statements agencies may have prepared summarizing the anticipated economic effects to help collect all of this information. We did not assess whether the agencies’ determinations regarding the benefits and costs were reasonable. In addition, we did not assess whether the agencies analyzed regulatory alternatives and uncertainty.

We conducted this performance audit from May 2016 to March 2018 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.

Appendix II: Additional GAO Analysis of Final Regulations Published During Specified Periods, 1996-2017

The figures and tables in this appendix provide more detailed information on the results of additional analyses we completed for this report related to each of our three objectives. For economically significant regulations, we provide precise statistics on the extent of a finding, because we reviewed the universe. For significant regulations, our findings are based on a sample and include the upper and lower bounds of confidence intervals for estimated values.

Analyses of Indicators Related to the Numbers, Scope, and Transparency of Regulations

In this section, we provide additional information from our analyses of: the extent to which economically significant regulations were published before or after the presidential elections in 2000, 2008, and 2016; the most active rulemaking agencies for economically significant and significant regulations among the three administrations’ transition and nontransition periods; the number of economically significant regulations for which agencies reported they were under a statutory or judicial deadline to promulgate the regulation; and the median length, in days, of Office of Information and Regulatory Affairs (OIRA) regulatory reviews under Executive Order (E.O.) 12866 for draft final economically significant and significant regulations during transition and nontransition periods.

We reviewed the extent to which economically significant regulations were published before or after the presidential elections in 2000, 2008, and 2016 and found that Presidents Clinton and Obama’s administrations increased their rate of rulemaking following the election, while President Bush’s administration decreased its rate of rulemaking. (See figure 14.)

We identified the most active rulemaking agencies for economically significant regulations among the three administrations’ transition and nontransition periods and did the same for significant regulations. (See tables 4-9.)

Agencies can indicate on Reginfo.gov whether they are required by a statutory or judicial deadline to promulgate a regulation. We did additional analysis for economically significant regulations and found agencies were less likely to indicate they were under such a deadline during the three administrations’ transition periods compared to nontransition periods.

Under E.O. 12866, agencies are expected to submit regulations deemed significant to OIRA for review. Nearly all regulations we reviewed had been reviewed by OIRA. For a small number of economically significant regulations (13 across all periods or approximately 2 percent of the economically significant population), we could not find evidence on Reginfo.gov that OIRA reviewed the regulation. However, the absence of evidence on Reginfo.gov does not necessarily mean that OIRA did not review those regulations and may instead indicate that the review dates were not entered into Reginfo.gov. Our review found that the median length of OIRA’s review increased for economically significant regulations during each transition. (See figure 15.) For significant regulations, there were no statistical differences among the three transition periods and compared to nontransition periods combined. (See figure 16.)

Analyses of Indicators Related to Agencies’ Reported Compliance with Selected Procedural Requirements for Promulgating Regulations

In this section, we provide additional information from our analyses of: agencies’ determinations regarding their regulations under the Regulatory Flexibility Act (RFA); agencies’ determinations regarding their regulations under the Paperwork Reduction Act (PRA); agencies’ determinations regarding their regulations under the Unfunded Mandates Reform Act of 1995 (UMRA); and

Congressional Review Act (CRA) noncompliance rates for the agencies publishing the largest number of regulations.

We reviewed agencies’ discussions of three procedural requirements– RFA, PRA, and UMRA–for economically significant regulations. (Figures 17-19 summarize the determinations agencies reached.)

We reviewed agencies’ discussions of three procedural requirements– RFA, PRA, and UMRA–for significant regulations. Figures 20-22 summarize the determinations agencies reached. We found the following statistical differences in comparing the determinations agencies reached for significant regulations:

RFA: There were no statistical differences among the three transition periods and nontransition periods in the determination that regulations might have a significant economic impact on a substantial number of small entities. Regulations published during President Clinton’s transition period were less likely than regulations published during President Bush’s transition period and nontransition periods to determine that the regulation would not have a significant economic impact on a substantial number of small entities. There were no statistical differences between Presidents Clinton’s and Obama’s transition periods for this determination under RFA. We also found statistical differences in the remaining two categories–regulations not subject to RFA and those not discussing RFA.

PRA: Significant regulations published during Presidents Obama’s and Clinton’s transition periods more frequently contained information collection requirements covered by PRA compared to nontransition periods. In addition, significant regulations published during President Clinton’s transition period more frequently contained information collections requirements compared to President Bush’s transition period. There were no other statistical differences in significant regulations containing information collection requirements. For the other categories, there were no statistical differences, except that significant regulations published during nontransition periods were less likely to discuss PRA than those published during President Obama’s transition period.

UMRA: There were no statistical differences among the transition and nontransition periods in potential federal mandates covered by UMRA.

We examined the CRA noncompliance rates for the agencies publishing the largest number of economically significant regulations. (See table 10).

Analyses of Indicators Related to the Anticipated Economic Effects Agencies Reported would Result from the Regulations

In this section, we provide additional information from our analyses of the extent to which: agencies indicated benefits justified costs for economically significant agencies estimated net costs or benefits for economically significant agencies anticipated costs, benefits, or transfers resulting from significant regulations.

We examined additional indicators related to the economic analyses that E.O. 12866 and Circular A-4 encourage agencies to conduct when promulgating regulations. E.O. 12866 states that an agency should propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. We examined the extent to which agencies indicated that the anticipated benefits from economically significant regulations would justify their costs and found that agencies during Presidents Clinton’s and Obama’s transition periods were more likely to indicate that benefits justified costs compared to these administrations’ nontransition periods. (See figure 23.) During President Bush’s transition period, agencies were less likely to indicate that the anticipated benefits of the regulation would justify its anticipated costs. We did not extend this analysis to significant regulations because the examples were too limited to provide statistically reliable estimates for the three transition periods and nontransition periods combined.

Monetizing both costs and benefits potentially allows an agency to calculate the net costs or benefits of a regulation and thus estimate how much better or worse off society will be as a result of the chosen regulatory approach. We found that agencies during Presidents Bush’s and Obama’s administrations, during both transition and nontransition periods, were more likely to calculate net costs or benefits than agencies during President Clinton’s transition and nontransition periods. (See figure 24.) We did not extend this analysis to significant regulations because the examples were too limited to provide statistically reliable estimates for the three transition periods and nontransition periods combined.

For significant regulations that did identify anticipated costs, benefits, or transfers, we found the following statistical differences in comparing the three transition periods and nontransition periods combined as explained below and in figure 25:

Economic Costs or Benefits or Both: For regulations falling into this category, the only statistical difference we found was that agencies were more likely during President Clinton’s transition period to identify anticipated economic costs or benefits or both compared to President Bush’s transition period.

Transfers: For regulations falling into this category, the only statistical difference we found was that agencies were less likely during President Obama’s transition period to identify anticipated transfers compared to President Bush’s transition period and all three administrations’ nontransition periods combined.

Both economic costs or benefits and transfers: For regulations falling into this category, the only statistical difference we found was that agencies were less likely during President Clinton’s transition period to indicate this compared to President Bush’s transition period.

No economic analysis: An estimated 43 percent of significant regulations across all periods reviewed contained no economic analysis and there were no statistical differences among the three transition periods reviewed and the nontransition periods combined.

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the individual named above, Tim Bober (Assistant Director), Michael O’Neill (Analyst in Charge), Carl Barden, Tim Guinane, Krista Loose, Ned Malone, Alexander Ray, Cynthia Saunders, Christie Stassel, and Andrew J. Stephens made key contributions to this report. Donna Miller, John Hussey, Steven Flint, and Rob Letzler also contributed.