The process of issuing and enforcing regulations is one of the basic tools of government. The main elements of the federal rulemaking process are described in section 553 of the Administrative Procedure Act (APA), which was enacted in 1946. The APA generally requires agencies to (1) publish a notice of proposed rulemaking in the Federal Register; (2) allow interested persons an opportunity to participate in the rulemaking process by providing “written data, views, or arguments”; and (3) publish the rule 30 days before it becomes effective. The notice of proposed rulemaking must include reference to the legal authority under which the rule is proposed and state the time, place, and nature of public rulemaking proceedings. In some cases, agencies issue advance notices of proposed rulemaking before a formal notice is published to receive public reaction to a rule as early as possible. Although the federal government has long regulated economic activity, several major new statutes were enacted in the 1960s and 1970s that prompted regulation in such areas as environmental quality, workplace safety, and consumer protection. By the 1980s, an array of federal regulations were in place that affected many of the decisions made by businesses and by other governmental units. For some time, state, local, and tribal governments have expressed concerns about the difficulty of complying with federal regulatory mandates without additional resources. Business groups have voiced similar concerns about rising costs that they said were being imposed by federal regulations. Both the executive and legislative branches have responded to these public and private sector concerns by attempting to reform the federal regulatory process. For example, in 1981, President Reagan issued Executive Order 12291 on “Federal Regulation,” which gave OMB the authority to review all new regulations for consistency with administration policies. The order also required agencies to prepare a “regulatory impact analysis” for each major rule, describing the costs, benefits, and alternatives to the rule. In September 1993, President Clinton issued Executive Order 12866 on “Regulatory Planning and Review,” which, among other things, established “principles of regulation” (e.g., requiring agencies to “identify and assess alternative forms of regulation” and to tailor their regulations to “impose the least burden on society”) and specific processes that agencies had to follow (e.g., conduct cost-benefit analyses for all economically significant rules). This executive order also states that agencies must, wherever feasible, “seek views of appropriate tate, local, and tribal officials before imposing regulatory requirements that might significantly or uniquely affect those governmental entities.” In October 1993, the President issued Executive Order 12875 on “Enhancing the Intergovernmental Partnership,” which, among other things, requires each agency to “develop an effective process to permit elected officials of state, local, and tribal governments to provide meaningful and timely input in the development of regulatory proposals containing significant unfunded mandates.” The President also made regulatory reform one of the central elements of the administration’s National Performance Review (NPR), which is a major management reform effort that was started in March 1993 under the direction of Vice President Gore and is intended to identify ways to make the government work better and cost less. Congress has been equally active in attempting to reform the federal regulatory process. For example, in 1980 Congress enacted the Regulatory Flexibility Act, which requires agencies to assess the impact of their regulations on small entities (e.g., businesses and governments) and to publish their plans for new regulations. During the 104th Congress, numerous legislative initiatives were introduced that attempted to reform the regulatory process. One of the first such efforts was UMRA, which was introduced as S. 1 in the Senate on January 4, 1995, and was enacted on March 22, 1995. Title I of UMRA established new procedures designed to ensure that Congress fully considers the potential effects of unfunded federal mandates before imposing them on state, local, and tribal governments or the private sector. Among other reforms, the procedures call for CBO to provide statements to authorizing committees about whether reported bills contain mandates and, if so, what their costs would be. Title II of UMRA, entitled “Regulatory Accountability and Reform,” contains the requirements imposed on federal agencies during the rulemaking process, and took effect on the day the act was signed by the President. Section 201 states that “ach agency shall, unless otherwise prohibited by law, assess the effects of ederal regulatory actions on tate, local, and tribal governments, and the private sector (other than to the extent that such regulations incorporate requirements specifically set forth in law).” Other sections in title II require agencies to prepare a written statement containing specific descriptions and estimates for any proposed rule or any final rule for which a proposed rule was published that includes any 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 the private sector—one of the items required in the written statement is a qualitative and quantitative assessment of the anticipated costs and benefits of the federal mandate (sec. 202); “identify and consider a reasonable number of regulatory alternatives” and select the least costly, most cost-effective, or least burdensome alternative (or explain why that alternative was not selected) for each rule for which a written statement is prepared (sec. 205); develop a plan in which agencies provide notice of regulatory requirements to potentially affected small governments; enable officials of those governments to provide input in the development of regulatory proposals; and inform, educate, and advise those governments on compliance with the requirements before establishing any regulatory requirements that might “significantly or uniquely” affect small governments (sec. 203); and develop an effective process to permit elected officers of state, local, and tribal governments (or their designees) to provide input in the development of regulatory proposals containing significant intergovernmental mandates (sec. 204). Section 206 of UMRA requires the OMB Director to collect the written statements prepared by the agencies and periodically forward them to the CBO Director. Section 207 requires the OMB Director to establish pilot programs in at least two agencies to test innovative and flexible regulatory approaches to reduce the reporting and compliance burden on small governments while meeting statutory goals and objectives. Section 208 requires the OMB Director to submit annual reports to Congress detailing agencies’ compliance with title II of UMRA. Title III of UMRA required the Advisory Commission on Intergovernmental Relations to conduct a study reviewing federal mandates, and title IV established judicial review under the act. The committee reports for the Senate bill that ultimately resulted in UMRA indicate that Congress was aware that the bill duplicated existing requirements in many respects. For example, the report by the Senate Committee on the Budget stated that, except for the requirement for small government plans, “the bill will not impose new requirements to implement in the regulatory process that are not already required under Executive Orders 12866 and 12875.” However, the report by the Senate Committee on Governmental Affairs stated that the “spirit and intent” of the written statement requirements involving cost-benefit analysis were “meant to be entirely consistent with the relevant portions of [Executive Order] 12866.” Therefore, Congress may have expected that the scope of these requirements would be the same as the scope of the executive order and would cover all economically significant rules. Within OMB, the Office of Information and Regulatory Affairs (OIRA) has primary responsibility for monitoring agency compliance with title II of UMRA. On March 31, 1995, the OIRA Administrator issued guidance for implementing title II. The guidance generally repeated the requirements in UMRA and did not further define many of the key words or phrases in the act (e.g., “expenditure” or “significantly or uniquely affect small governments”). The OIRA guidance noted parallels between the requirements in (1) sections 202 and 205 of UMRA and Executive Order 12866 and (2) section 203 and the Regulatory Flexibility Act. “Each agency has developed processes suited to its needs, appropriate to its mission, and responsive to its constituents. While more work remains to be done, real progress has occurred in both the agency infrastructure under which consultations take place, and the way that agencies use this structure to analyze specific rules in ways that reduce costs and increase flexibility for all levels of government, and for the private sector, in implementing important national priorities.” Despite the enactment of UMRA and other reform initiatives, concerns have continued to be raised about the effect of federal regulations on the public and private sectors. As a result, proposed legislation to reform the federal rulemaking process was introduced in the 105th Congress. One such proposal is S. 981, the “Regulatory Improvement Act of 1997,” which was introduced in June 1997. S. 981 addresses many of the same issues as Executive Order 12866 and UMRA, including cost-benefit analysis, examination of regulatory alternatives, and the transparency of the regulatory process. However, the bill goes beyond the executive order and UMRA’s requirements in these areas and adds some new elements to the rulemaking process. For example, S. 981 would require agencies to conduct cost-benefit analyses for all “major” rules that have an annual effect on the economy of $100 million—a much broader standard than in UMRA ($100 million in expenditures by certain regulated entities). S. 981 also would require agencies to conduct risk assessments and peer reviews for these major rules, and the bill would apply to many of the independent regulatory agencies. Neither UMRA nor Executive Order 12866 specifically requires risk assessments or peer reviews, and neither applies to independent regulatory agencies. S. 981 also contains judicial review provisions that are not in UMRA or the executive order. To address our overall objective of determining the effect of title II of UMRA on agencies’ rulemaking actions, we reviewed the substantive requirements in title II and determined how federal agencies have implemented those requirements.