Regulatory Reform

In GAO's view, S. 981--the Regulatory Improvement Act of 1998--can provide a sound basis for periodic examinations of existing government rules, and systematic peer review can strengthen agencies' cost-benefit analyses. This testimony focuses on four areas of relevance to the bill: agencies' implementation of (1) the transparency requirements in Executive Order 12866, (2) title II of the Unfunded Mandates Reform Act of 1995, (3) the public notification requirements in section 610 of the Regulatory Flexibility Act of 1980, and (4) the Office of Management and Budget's "best practices" guide for economic analyses used in rulemaking.

GAO noted that: (1) GAO reviewed four major rulemaking agencies' public dockets and concluded that it was usually very difficult to locate the documentation that the executive order required; (2) in many cases, the dockets contained some evidence of changes made during or because of the Office of Information and Regulatory Affairs (OIRA) review, but GAO could not be sure that all such changes had been documented; (3) in other cases, the files contained no evidence of OIRA changes, and GAO could not tell if there had been no such changes to the rule or whether the changes were just not documented; (4) UMRA's title II requirements had little effect on agencies' rulemaking actions because those requirements: (a) did not apply to many large rulemaking actions; (b) permitted agencies not to take certain actions if the agencies determined they were duplicative or unfeasible; and (c) required agencies to take actions that they were already required to take; (5) the new version of S. 981 contains one set of requirements that was not in the bill introduced last year--that agencies develop a plan for the periodic review of rules issued by the agency that have or will have a significant economic impact on a substantial number of small entities; (6) each agency is also required to publish in the Federal Register a list of rules that will be reviewed under the plan in the succeeding fiscal year; (7) although the Unified Agenda is a convenient and efficient mechanism by which agencies can satisfy the notice requirements in section 610 of the RFA, agencies can print those notices in any part of the Federal Register; (8) GAO believes that the reaffirmation and refinement of the section 610 rule review process in S. 981 can serve to underscore Congress' commitment to periodic review of agencies' rules and the public's involvement in that process; (9) another critical element of S. 981 is its emphasis on cost-benefit analysis for major rules in the rulemaking process; (10) GAO has been examining 20 economic analyses at 5 agencies to determine the extent to which those analyses contain the best practices elements recommended in OMB's January 1996 guidance for conducting cost-benefit analyses; (11) the 20 economic analyses varied significantly in the extent to which they contained the elements that OMB recommended; and (12) agency officials stated that the variations in the degree to which the economic analyses followed OMB guidance and the limited use of the economic analyses were primarily caused by the limited degree of discretion that the underlying statutes permitted.