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THE WHITE HOUSE

Office of the Vice President


For Immediate Release September 1, 1994
                       Accompanying Report of 
                  the National Performance Review

                   OFFICE OF THE VICE PRESIDENT
 
                           Washington, DC
                           September 1993

CONTENTS

 Executive Summary...................................1
 Introduction........................................7

RECOMMENDATIONS AND ACTIONS

REG01: Create an Interagency Regulatory Coordinating Group..........................17 REG02: Encourage More Innovative Approaches to

 Regulation..................................23
 REG03: Encourage Consensus-Based Rulemaking........29
 REG04: Enhance Public Awareness and Participation..35
 REG05: Streamline Agency Rulemaking Procedures.....41
 REG06: Encourage Alternative Dispute Resolution 
 when Enforcing Regulations..................47
 REG07: Rank Risks and Engage in "Anticipatory" 
 Regulatory Planning.........................53
 REG08: Improve Regulatory Science..................58
 REG09: Improve Agency and Congressional 
 Relationships...............................65
 REG10: Provide Better Training and Incentives for 
 Regulators..................................69

APPENDICES

  1. Description of the Executive Order on Regulatory Reform...............................77
  2. Summary of Actions by Implementation Category...79
  3. Accompanying Reports of the National Performance Review..............................81

IMPLEMENTATION CATEGORIES

Each action is followed by a number in parentheses that indicates the necessary avenue for effective implementation. Appendix B organizes all actions according to these categories.

(1) Agency heads can do themselves

(2) President, Executive Office of the President, or

Office of Management and Budget can do

(3) Requires legislative action

(4) Good idea, but will require additional work, or

may be better suited for future action

ABBREVIATIONS

ACUS--Administrative Conference of the United States ADR--Alternative Means of Dispute Resolution APA--Administrative Procedure Act
APHIS--Animal and Plant Health Inspection Service CPSC--Consumer Product Safety Commission DOE--Department of Energy
DOI--Department of the Interior
DOT--Department of Transportation
EO--Executive Order
EPA--Environmental Protection Agency
FAA--Federal Aviation Administration
FACA--Federal Advisory Committee Act
FCCSET--Federal Coordinating Council for Science, Engineering and Technology
FDA--Food and Drug Administration
FDIC--Federal Deposit Insurance Corporation FHWA--Federal Highway Administration
FTC--Federal Trade Commission
GAO--General Accounting Office
GNP--Gross National Product
HUD--Department of Housing and Urban Development IRS--Internal Revenue Service
LEI--Legal Education Institute
NAPA--National Academy of Public Administration NMFS--National Marine Fisheries Service NHTSA--National Highway Traffic Safety Administration
NPR--National Performance Review
NRC--Nuclear Regulatory Commission
OIRA--Office of Information and Regulatory Affairs OMB--Office of Management and Budget
OPPE--Office of Policy Planning and Evaluation, EPA OSTP--Office of Science and Technology Policy RCG--Regulatory Coordinating Group
RSPA--Research and Special Programs Administration SAB--Science Advisory Board, EPA
USDA--U.S. Department of Agriculture


EXECUTIVE SUMMARY

The rulemaking process is very complex. Not long ago, a federal agency found that it needed an 18-foot chart, with 373 boxes, to explain its rulemaking process. And this agency's process was not unusually complex. Despite this complicated process, regulations do not always achieve their intended benefits and can cause additional problems. Consider, for example, that:

--Chocolate makers had trouble determining how to comply with the Occupational Safety and Health Administration's noise standards without running afoul of the Food and Drug Administration's hygiene standards.

--The 1982 Surface Transportation Assistance Act required the Department of Transportation to force trucks to carry "splash and spray suppression devices"--that is, fancy mud flaps--to curtail the road spray on cars traveling nearby, although tests showed that the flaps did not improve car drivers' visibility and, thus, road safety.

--Only the intervention of senior Transportation Department officials prevented the National Highway Traffic Safety Administration (NHTSA) and the Federal Aviation Administration, both located within the department, from imposing regulations that would have forced parents traveling by airplane to carry along two child seats--one for the plane ride, a second for car rides taken during the trip.

Federal regulations, of course, are not supposed to create problems like that for individuals, businesses, and state, local, and tribal governments. But such problems are not surprising, considering the number of regulations on the books. Nonetheless, although Americans dislike regulations in general, they support specific ones to promote health, safety, environmental, and other goals.

THE EFFECTS OF REGULATION. Regulations affect virtually every American citizen, household, business, institution, community, and level of government. They reduce the amounts of lead in the air we breathe; ensure that cars have seat belts, air bags, safety glass, and brakes that work; require content and nutrition labeling of foods; establish eligibility for agricultural, educational, and small business loans and grants; and define distinctions between legitimate and deceptive advertising, fair and unfair business practices.

And, in fact, regulatory programs have produced real results. The NHTSA's crash-worthiness and brake standards have saved at least 112,000 lives in the last 25 years, while the Consumer Product Safety Commission helped to cut in half the annual number of electrocutions involving consumer products. Nevertheless, the federal regulatory system is not working as well as it should. Many federal regulations impose too many constraints on individuals and businesses (such as by unnecessarily using command-and-control structures that tell regulated parties precisely what to do) while still failing to accomplish the goals for which they were imposed.

The task at hand is straightforward, but challenging. We need to give the public the protection and services it expects at a reasonable cost, while eliminating ineffective and avoiding unnecessarily burdensome regulations. And we must do so at a time when most agencies will face the dual, and seemingly contradictory, pressures of providing more services with fewer resources.

Generally speaking, regulators and Congress should employ regulations more selectively and sometimes use other approaches to accomplish their goals, such as providing more information to consumers. When opting for regulations, regulators should use market-based, performance-oriented or other innovative approaches, thus giving affected parties more freedom to meet the goals behind the rules. The government should better educate its regulators about possible tools at their disposal. And regulators should communicate more with the public and other interested parties and rely more heavily on scientific data.

THE REGULATORY PROCESS. Regulations are directives, standards, or procedures, supported by penalties or other sanctions, that are designed to shape the behavior of individuals, businesses, and state, local, and tribal governments..[Endnote 1] The federal government employs regulations for much of what it does--distributing grants, benefits, contracts, and other subsidies; protecting bank depositors and imposing other financial service requirements; and enforcing health, safety, and environmental laws.

The development of regulations involves four key players: (1) Congress passes legislation to authorize or require an agency to issue regulations; (2) the executive branch decides the form and extent of regulations; (3) interested parties may comment on proposed regulations or challenge final ones in court; and (4) federal courts, which review regulations that are challenged in lawsuits, sometimes order agencies to revise the challenged regulations.

The number of regulations that agencies issue varies dramatically. Agencies may issue just a few regulations a year or thousands. While the time that agencies devote to developing regulations also may vary widely, they will typically take 12-18 months to develop a proposed regulation after a statute is enacted, and another 12-18 months to issue a final regulation.

The process by which agencies issue regulations is governed by numerous statutes, executive orders, and internal agency policies and requirements. While the Administrative Procedure Act establishes a simple, straightforward process, also important are such laws as the Paperwork Reduction Act, Regulatory Flexibility Act, Federal Advisory Committee Act, Negotiated Rulemaking Act, and National Environmental Policy Act. In addition, such laws as the Clean Air Act and the General Education Provisions Act impose procedural requirements for certain specific regulations.

Agencies have developed their own lengthy review procedures, designed to ensure coordination among agency and department offices. The full review process--within the agency, department, and administration--normally is repeated twice, first when the regulation is proposed and then again when it is finalized.

Executive orders also play a major role in shaping regulations. Executive orders require agencies to conduct specific analysis (such as a cost-benefit analysis), establish centralized review by OMB of proposed and final regulations, and establish mechanisms to coordinate and plan executive branch rulemaking activities.

IMPROVING THE REGULATORY PROCESS. The President, agencies, and Congress need to take a series of steps to improve the process to accomplish regulatory goals in a cost-effective manner.

First, to help agencies share information and coordinate their approaches to regulatory issues, the President should create an interagency regulatory coordinating group (RCG). This group should include political appointees or their designees from key domestic regulatory agencies and certain key White House advisors. This group should, within a year, oversee the development of a manual of regulatory approaches.

Second, the President should direct agency heads to use market-oriented and other innovative approaches to regulation whenever they are appropriate. For example, rather than order coal-fired power plants to install scrubbers (a type of pollution control equipment) the government might order such plants not to emit more than a given number of pounds of sulfur dioxide per million BTU (British thermal unit) and let them decide how to meet that requirement.

Third, in the hopes of encouraging consensus-based rulemaking, the President should encourage agencies to use negotiations to develop regulations--i.e., the "reg neg" process. This process allows representatives of an agency to work with affected interests in a cooperative effort to develop regulations.

Fourth, the President and agencies should take steps to enhance public awareness and participation both in developing and implementing regulatory programs. The President should encourage agencies to convene focus groups, hold more useful public hearings, and use other tools by which to involve those who are affected by their regulations. Agencies also should consider using information technology more aggressively.

Fifth, agencies will streamline their internal rulemaking processes, including recommending whether legislative changes are needed. Agencies will begin to experiment with "direct final" rulemaking, which will sharply reduce the time needed to implement noncontroversial regulations.

Sixth, in enforcing regulations, the President should strongly encourage agencies to use alternative means of dispute resolution--which refers to a collection of techniques that are designed to help disputing parties resolve conflicts in mutually agreeable ways. Such "ADR" techniques could help nourish more cooperative relations between regulators and regulated parties.

And finally, among its other recommendations, this report suggests that agencies concentrate their regulatory resources on the most serious environmental, health, and safety risks and engage in long-term regulatory planning; that the President order relevant agencies to create science advisory boards as tools to use scientific data more widely in agenda-setting and decision making; that agencies establish technical drafting services for congressional committees and subcommittees; and that the administration take steps to provide more training for agency heads and staff.

ENDNOTE

  1. For this report, "regulation" is defined to exclude those regulations affecting how the government runs itself (e.g., personnel, budget, and procurement), which are addressed in other National Performance Review Accompanying Reports.

INTRODUCTION

When our society decides government intervention is necessary to solve problems in fields such as transportation, banking, health, agriculture, education, housing, or the environment, the federal government often responds with regulations. Congress enacts legislation allowing or requiring an agency to come up with a solution, and then the agency issues regulations that detail how the solution will be implemented..[Endnote 1]

Public opinion polls have shown that "while Americans dislike regulations as a general matter, when asked about specific programs, such as for health and safety, they respond favorably."[Endnote 2] No one wants to return to the days when even minor accidents could be fatal or seriously disfiguring because cars were not required to have seat belts or windshields made of safety glass, or when unchecked water pollution caused dead lakes and burning rivers.

Regulatory programs have significantly improved our quality of life. For instance, the benefits of environmental regulation are illustrated by a comparison of our air and water quality to that of former Eastern bloc countries, which did not regulate pollution effectively. Another example: at least 112,000 lives have been saved in 25 years as a result of crashworthiness and brake standards issued by the National Highway Traffic Safety Administration.[Endnote 3] The Consumer Product Safety Commission helped cut in half the annual number of electrocutions involving consumer products.[Endnote 4]

Nevertheless, too many businesses and individuals feel constrained by the cumulative burden of regulations issued by many diverse federal agencies--particularly by those regulations that are poorly conceived or duplicative. Everyone running a business has his or her own illustration of unnecessary regulation. The American public's desire to get government off its back is strong.

The challenge facing government is how to do both--provide the public, the government's ultimate customer, with the protection and services it expects at a reasonable cost, while getting rid of or avoiding unnecessary, burdensome regulations. Further complicating the picture is the reality that most agencies will be required to provide more services with fewer resources. Some regulatory agencies have already seen workloads skyrocket while resources decreased.[Endnote 5] Given the budget deficit, most agencies will not have increased resources in the near future.

What are Regulations?

Regulations are federal requirements, directives, standards, or procedures, backed by the use of penalties or other sanctions, that are intended specifically to modify the behavior of state and local governments, private industry, businesses, and individuals.[Endnote 6] Regulations are almost always required whenever the federal government acts. For example, regulations assist in:

--the distribution of grants, benefits, contracts and other subsidies;

--the protection of depositors in financial institutions; and

--the enforcement of health, safety and environmental laws.

When people think of regulation, they usually think of command-and-control regulations--i.e., where the government decides precisely what action regulated entities must take. A requirement that coal-fired power plants install a scrubber (a specific type of pollution control equipment) is an example of command-and-control regulation.

Some regulatory programs, however, leave more discretion with the regulated entity and take advantage of market forces to achieve the desired result. For example, performance standards might require power plants to emit no more than a given number of pounds of sulfur dioxide per million Btu (British thermal unit) produced. Individual plants then would decide how to meet the standard. Alternatively, an information disclosure program might require food processors to label their products for content and nutrition to permit consumers to make informed choices.

In addition to issuing binding regulations, agencies also rely on other methods to establish agency policy, such as policy statements, guidance documents, enforcement manuals, and memos to agency personnel. Although legally these policies cannot bind people outside the agency, as a practical matter, they may have that effect. (These other methods are not required to undergo the regulatory review procedures described below.)

How are Regulations Developed?

Four key actors are involved in developing regulations. Congress passes legislation that authorizes or requires an agency to issue regulations. The executive branch (including independent regulatory agencies), working within the statutory limits imposed by Congress, decides the form and actual substance of regulation and issues individual rules through a rulemaking process. Interested members of the public may provide input to Congress, comment on regulations proposed by agencies, and challenge final regulations in court. Federal courts review rules when they are challenged in lawsuits brought against the government. The courts can order agencies to revise rules if they determine that rules are arbitrary and capricious or violate the Constitution or a statute.

The process by which agencies issue rules is governed by numerous statutes, executive orders and internal agency policies and requirements. A simplified, typical version of the rulemaking process is described in the flow chart in Figure 1. In fact, the process is far more complicated, as is evidenced by flow charts of several agency processes that were reviewed.

The time devoted by agencies to develop rules varies dramatically.[Endnote 7] In general, though, a relatively common time line is 12 to 18 months from enactment of the authorizing statute to issuance of a Notice of Proposed Rulemaking, and another 12 to 18 months between this notice and issuance of the final rule. The number of regulations agencies issue also varies dramatically depending on the scope and nature of the agency's programs. Some agencies, like the National Telecommunication and Information Administration in the Department of Commerce, may issue only a handful of rules a year. Others, like the National Oceanic and Atmospheric Administration or the Federal Aviation Administration, may publish hundreds (or even thousands) of regulations a year.

BASIC RULEMAKING PROCESS. The Administrative Procedure Act (APA) is the basic legal structure governing the rulemaking process.[Endnote 8] It establishes a simple and straightforward process.[Endnote 9] Under Section 553 of the APA, the agency generally must publish a notice of proposed rulemaking in the Federal Register that either sets forth the proposed rule or describes what the agency intends to do. The agency must allow the public to comment in writing on the proposed rule. (The Act does not specify a time period for comments, but agencies usually allow at least 30 days. Agencies sometimes also allow public comment at a hearing on the proposed rule.) The agency then is required to review the public comments, modify the rule as appropriate, and publish the final rule and a "statement of basis and purpose" in the Federal Register.

Over the years, a large number of other requirements have been layered on top of this simple process. Individually each requirement may serve a useful purpose.[Endnote 10] Cumulatively they have made the rulemaking process increasingly burdensome and rigid. [Endnote 11]

Additional Statutes Governing the Rulemaking Process

Several other statutes govern the rulemaking process:

--The Paperwork Reduction Act requires the Office of Management and Budget (OMB) to review all regulations that require the public to submit information (or make it available) to the government.[Endnote 12]

--The Regulatory Flexibility Act requires agencies to consider the special needs and concerns of small entities, particularly small businesses, and to prepare a "regulatory flexibility analysis" describing the rule's effect on these entities. [Endnote 13]

--The Federal Advisory Committee Act governs the use and creation of committees that include non-federal employees to get advice or recommendations in the rule-making process.[Endnote 14]

--The Negotiated Rulemaking Act provides guidelines for certain types of consensus-based
rulemaking.[Endnote 15]

--The National Environmental Policy Act requires agencies to analyze the effect of the regulation on the environment and, in certain circumstances, to prepare an environmental impact statement.[Endnote 16]

--Some specific substantive statutes (e.g., the Clean Air Act and the General Education Provisions Act) mandate additional procedural requirements for specific rules.[Endnote 17]

EXECUTIVE ORDERS GOVERNING THE RULEMAKING PROCESS. Requirements have also been added by executive orders. Presidents Nixon, Ford, and Carter each developed his own procedures for review of executive agency rules.[Endnote 18] During the Reagan and Bush administrations, Executive Order 12291 (February 1981), required agencies to forward to the Office of Information and Regulatory Affairs (OIRA) in OMB all proposed and final rules for review before issuing them in the Federal Register.[Endnote 19] OIRA's staff would review the rules for consistency with administration policy and consult with other offices within the Executive Office of the President and with other agencies. Conflicts or inconsistencies in policies or requirements, to the extent they were identified, were then resolved before OIRA would complete its review of the proposed or final rule. As a practical matter, rules were rarely issued without OIRA clearance.[Endnote 20]

During the last half of the Bush administration, some controversial rules were also reviewed by the President's Council on Competitiveness. The Council, chaired by then-Vice President Quayle and nominally composed of key Cabinet officials, worked through a White House staff that wielded great power over agency rulemaking through its participation in the OMB review process. It was criticized for giving big business special back-door access to the rulemaking process.

During the Reagan and Bush administrations, coordination and regulatory planning were also covered by Executive Order 12498 (January 1985), which required each agency to submit annually to OMB a draft regulatory program. The program was described as "a statement of [the agency's] regulatory policies, goals and objectives for the coming year and information concerning all significant regulatory actions underway or planned." OMB then reviewed the draft programs for consistency with administration principles and priorities and the planned actions of other agencies.[Endnote 21] During this time, other executive orders also required agencies to analyze regulations for federalism implications, family values, regulatory takings, and litigation effects.[Endnote 22]

The day after taking office, President Clinton announced the termination of the Council on Competitiveness. In addition, the Clinton administration is issuing a new executive order revoking and replacing Executive Orders 12291 and 12498. The Clinton administration's regulatory review process is designed to continue the concept of centralized review while avoiding pitfalls of the previous processes, such as review of too many regulations, delay, lack of adequate public participation, and lack of openness. The process will make planning more systematic, will eliminate the multiple impact statements, and will establish a triage system by which agencies and OIRA, working together, identify which upcoming rules are significant enough to warrant OMB review.

Note: The Clinton administration regulatory review executive order was developed by a special working group within the White House. This working group focused on regulatory planning and executive review. NPR addressed broader issues, although there were many areas of overlap. The two groups worked closely with each other and their efforts are complementary.

NPR strongly supports the regulatory review process developed by the White House working group, which is described in Appendix A.

AGENCY REQUIREMENTS GOVERNING RULEMAKING. In addition to the requirements imposed by Congress through statute and by the President through executive orders, most agencies that engage in substantial rulemaking activities have developed lengthy internal review procedures to ensure coordination among agency and department offices. These procedures allow rules to benefit from the full range of expertise and perspectives within the department. The office in charge of the rule often must obtain clearance from certain staff offices (e.g., general counsel's office) and sometimes from other program offices. For those agencies that are part of a cabinet department (such as the Federal Aviation Administration, which is part of the Department of Transportation), clearances frequently are required at the department level. The entire review process, within the agency, within the department, and within the administration, is normally repeated twice--first when the rule is proposed and again when the rule is finalized.[Endnote 23]

What are the Problems With the Current System?

There are problems with both the substance of regulations and the process by which they are issued. Sometimes the problems are linked. These problems are addressed at length in the recommendations that follow; the most significant ones are summarized here.

One of the major problems is that regulatory programs rely too heavily on traditional command-and-control regulation rather than on more innovative, marketoriented mechanisms that allow regulated entities greater flexibility in meeting regulatory objectives. This over-reliance on command-and-control stems from a variety of causes, including:

--congressional and agency lack of knowledge about innovative regulatory design,

--congressional distrust of agencies, which makes Congress hesitant to grant agencies the flexibility to try new approaches,

--lack of information necessary to design an innovative regulatory approach, and

--agency and congressional distrust of regulated entities.

Another major problem with the content of regulations is that society does not always get the maximum benefits from the amount it spends on regulation. This is partially due to Congress' and regulators' over-reliance on command-and-control regulations. It is also the result of insufficient planning and prioritization, which can lead to inefficient expenditures, including forcing society to spend more money to address small problems rather than major ones.

The multiple layers of review in the rulemaking process--exemplified by the 18-foot chart with 373 boxes one agency used to describe its process--are also a problem. While extensive review and coordination are appropriate for significant rules (the government should not impose regulations lightly), such an approach is inappropriate for simple or routine rules.

The long time it frequently takes agencies to issue rules also is a major problem because it delays resolution of the problem the rule is supposed to address and creates uncertainty. Some delay arises from the need to obtain public comments or additional scientific or other information. On the other hand, undue delay can be caused by inappropriately long agency and executive branch clearance processes.

Lack of information is another serious problem. To a certain extent, this stems from the adversarial nature of the rulemaking process; in many rulemakings, regulated entities, public interest groups, and other parties are more interested in protecting their own positions than in providing useful information to the agency or finding a solution to the problem. Incomplete scientific data and the pressures of time also require agencies to make decisions without as much information as would be ideal.

What Should a Rulemaking Process Accomplish?

The rulemaking process has evolved over time to become a lengthy, complex process. To determine how to improve the regulatory system, it is necessary to identify its objectives. Ideally, the rulemaking process should produce a rule that:

--addresses an identifiable problem,

--implements the law faithfully,

--implements the President's policies,

--is in the public interest,

--is consistent with other rules and policies (federal, state, local, tribal, and international),

--is based on adequate information,

--is adequately and rationally justified,

--accomplishes goals in a cost-effective manner,

--can actually be implemented,

--is acceptable and enforceable,

--is easily understood, and

--stays in effect only as long as is necessary.

The process should:

--respond in a timely manner,

--be efficient, and

--be both fair and perceived as fair.

The rulemaking process requires agencies to balance these objectives because some of them are at odds with each other. For example, collecting adequate information takes time and may prevent an agency from responding in a timely manner. Circumstances or the state of scientific knowledge may have changed since legislation was passed so that a rule that implements the law faithfully may no longer address an identifiable problem. The easiest rule to enforce may not be the most effective or efficient. Thus, in designing a process, and in individual rulemakings, agencies must make trade-offs between the different goals of the regulatory process.

An improved regulatory process needs to produce regulations that achieve their goals more efficiently. To do this, regulators must have the flexibility to strike the proper balance among the objectives of the rulemaking process. The complexity of the rule, the level of agency expertise, the extent of public interest, the presence of scientific issues, and other factors will determine the appropriate balance. Striking the right balance will ensure that regulators select the right regulatory tool to solve the problem.

ENDNOTES

  1. Although many statutes require agencies to issue regulations to implement and clarify the provisions, some statutes are self-implementing or detailed enough that regulations are unnecessary.
  2. Adler, Robert, Stephen Klitzman, and Richard Mann, " Shaping Up Federal Agencies: A Basic Training Program for Regulators," Journal of Law & Politics, vol. VI, no. 2 (Winter 1990), p. 347.
  3. National Highway Traffic Safety Administration and Federal Highway Administration, Moving America More Safely: An Analysis of the Risks of Highway Travel and the Benefits of Federal Highway, Traffic, and Motor Vehicle Safety Programs (September 1991), p. 48.
  4. U.S. Consumer Product Safety Commission, Report on Accomplishments and Planned Activities (Washington, D.C., June 1993), p. 1.
  5. The Carnegie Commission on Science, Technology, and Government reported that: [B]etween 1980 and 1985, EPA's staff decreased by approximately 10 percent, even though the agency assumed responsibility for the substantial Comprehensive Environmental Response, Compensation, and Liability Act [Superfund] in 1980; Congress also reauthorized and significantly expanded three other acts in EPA's jurisdiction during this period. . . . [I]mports of substances under [FDA's] jurisdiction tripled from 500,000 entries in 1971 to more than 1.5 million in 1990. Between 1985 and 1990, R&D expenditures in the pharmaceutical industry doubled, leading to a sharp upturn in applications for new products submitted to FDA. In 1989, agency reviewers received 82 percent more applications than in 1980. From 1980 to 1988, FDA was required to implement 21 new laws and amendments, while its overall work force decreased by 11 percent. Carnegie Commission on Science, Technology, and Government, Risk and the Environment: Improving Regulatory Decision Making (Washington, D.C., June 1993), pp. 33-34 (footnotes omitted).
  6. For purposes of this report, "regulation" is defined to exclude regulations controlling how the federal government runs itself. Other National Performance Review reports are addressing these types of rules (e.g., personnel, budget, and procurement).
  7. For example, when there is an emergency, the Federal Aviation Administration can issue an airworthiness directive modifying aircraft requirements within hours of an accident without undergoing notice-and-comment rulemaking. At the other extreme, the rule requiring passive restraint devices in cars took 15 years from initiation of development, through litigation, to implementation of a final rule.
  8. Public Law 404 (June 11, 1946), codified in principle part at 5 U.S.C. 551-559, 701-706 (1988).
  9. Although the accompanying text describes the standard Administrative Procedure Act (APA) procedures, those procedures may not apply in certain circumstances because of special provisions in the APA. For a full description of the basic process and the exceptions contained in the APA, see Administrative Conference of the United States, A Guide to Federal Agency Rulemaking, 2nd ed. (1991).
  10. Some commenters have argued that those opposed to regulation added such requirements purposefully to slow the rulemaking process. See authorities cited in Eisner, Neil R., "Agency Delay in Informal Rulemaking," Administrative Law Journal, vol. 3, no. 1 (Spring 1989), n. 24 and accompanying text.
  11. Students of the regulatory process refer to this as the "ossification" of the rulemaking process. McGarity, Thomas O., "Some Thoughts on 'Deossifying' the Rulemaking Process," Duke Law Journal, vol. 41 (June 1992), pp. 1385-86.
  12. 44 U.S.C. 3501-3520 (1990).
  13. 5 U.S.C. 601-612 (1988).
  14. 5 U.S.C. App. (1988).
  15. 5 U.S.C.A. 561-570 (1993 Supp.).
  16. 42 U.S.C. 4321-4347 (1988).
  17. 42 U.S.C. 7607 (1991 Supp.), and 20 U.S.C. 1232 (1988).
  18. Carnegie Commission, Risk and the Environment, p. 48.
  19. Executive Order (EO) 12291 did not require independent agencies to clear regulations through the Office of Management and Budget (OMB). Certain categories of time-sensitive, technical, and noncontroversial rules did not have to be cleared by OMB pursuant to agreements OMB reached with some agencies. The executive order did not require OMB review of certain other categories of rules, including those relating to military or foreign affairs, or to agency organization, management, or personnel (EO 12291 1(a)). Technically, a rule could be published without OMB clearance in case of emergencies or if obtaining such clearance conflicted with statutory or court-ordered deadlines (EO 12291, 8(a)). Nevertheless, for practical, political reasons, agency heads seldom chose to publish rules without OMB clearance, except when faced with true emergencies or court-ordered deadlines.
  20. Although the head of an agency or department usually had legal authority to issue the rule, politically it was almost impossible to do so prior to clearance from OMB.
  21. Darman, Richard G., Director of OMB, "Presidential Review of Agency Rulemaking," memorandum for the heads of departments and agencies, April 3, 1989, attachment.
  22. E.O. 12612, 52 FR 41685 (1987); E.O. 12606, 52 FR 34188 (1987); E.O. 12130, 53 FR 8859 (1988); and E.O. 12778, 56 FR 55195 (1991).
  23. For an interesting discussion of how the rulemaking process works in the context of a particular rule, see Elliott, Donald, "TQMing OMB: Or Why Regulatory Review Under Executive Order 12291 Works So Poorly and What President Clinton Can Do About It," draft, August 17, 1993, pp. 10-16, forthcoming in Law and Contemporary Problems, vol. 57 (1994).

REG01:
Create an Interagency Regulatory Coordinating Group

Background

Federal regulatory agencies confront numerous overlapping and cross-cutting issues. One reason for the overlap is that the government must divide itself into organizational units--and the problems the government has to solve do not fit neatly into these divisions. Overlap also arises from science, economic, and policy issues that cut across a wide variety of problems and agencies..[Endnote 1] Agencies also face similar cross-cutting concerns about how best to administer the regulatory process.

OVERLAP EXISTS. Some of the governmental divisions of responsibility may not make sense, but even those that are sensible create potential for conflicting or duplicative regulations. For instance, it is logical to have one agency in charge of workplace safety and another in charge of food safety. Such a division, however, can cause problems. For example, in the early 1980s chocolate manufacturers had difficulty deciding how to meet both noise standards imposed by the Occupational Safety and Health Administration (OSHA) and hygiene standards imposed by the Food and Drug Administration (FDA).[Endnote 2] One problem was the concern that porous insulation that reduced noise from machinery could not be kept clean enough to meet FDA standards.

It is also common for agencies to have overlapping jurisdiction for the same or related problems. For example, at least three agencies regulate food safety: FDA (food items exclusive of meat and poultry), the Food Safety and Inspection Service in the Department of Agriculture (USDA) (meat and poultry), and the Environmental Protection Agency (EPA)(pesticide tolerances).[Endnote 3] Housing is regulated by, among others, the Department of Housing and Urban Development (HUD), the Department of Veterans Affairs (through loan standards), and USDA (through Farmers Home Administration loan standards). Particular substances or chemicals also may be regulated by different agencies in different settings. Lead, for example, poses problems that fall within the jurisdiction of numerous agencies--representatives of approximately 15 different federal agencies are on the Interagency Task Force on Lead (including HUD, EPA, FDA, the Consumer Product Safety Commission (CPSC), the Department of Health and Human Services' Centers for Disease Control, and the Department of Defense).[Endnote 4]

The potential for conflict also arises because individual industries are regulated by several agencies. For example, the auto industry has to meet vehicle safety and fuel economy standards issued by the National Highway Traffic Safety Administration (NHTSA), vehicle and plant emission standards issued by EPA, worker safety standards issued by OSHA, advertising requirements issued by the Federal Trade Commission, and securities regulations governed by the Securities and Exchange Commission, to name just a few.

CURRENT COORDINATING MECHANISMS. Currently, interagency coordination early in the rulemaking process occurs on an ad hoc basis--e.g., when a specific complaint arises or as executive branch or congressional offices identify a particular problem. The Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) provides a backstop on a rule-by-rule basis through its executive order review.[Endnote 5]

At times, agencies do coordinate with each other on specific problems. For example, FDA, USDA, and EPA recently announced joint efforts to address problems posed by pesticide residues in food.[Endnote 6] EPA and the Departments of Transportation (DOT) and Energy coordinate on the corporate average fuel economy standards for automobiles. An interagency committee on migrant farmworkers, led by the Departments of Health and Human Services (HHS), Education, and Labor, addresses problems caused by overlapping jurisdiction on migrant farmworker issues.

A limited number of opportunities also exist to coordinate or exchange information about broader regulatory issues. General counsels from various agencies and chairs of independent regulatory commissions meet occasionally under the sponsorship of the Administrative Conference of the United States (ACUS), which serves as an advisory agency and a clearinghouse on administrative law procedure.[Endnote 7] The Office of Science and Technology Policy (OSTP) and the Federal Coordinating Council for Science, Engineering and Technology also occasionally coordinate scientific issues, as when OSTP issued its carcinogen risk guidelines.[Endnote 8]

Coordination, or at least exchange of information, also occurs at the staff level in several informal forums. Scientists from different agencies researching in a particular field often communicate with each other about their research.[Endnote 9] A small group of career staff regulators from various agencies have a brown-bag lunch once a month to exchange experiences and ideas about ways to improve the regulatory process. A larger group of regulatory professionals from different federal agencies and disciplines operate the Interagency Regulatory Colloquium, a monthly workshop to explore programlevel problems and innovative practices within agencies, and to discuss issues of current concern. [Endnote 10]

As mentioned above, OMB also serves as a backstop to identify and require resolution of conflicting regulations. For example, OMB found that the Mine Safety and Health Administration was proposing to issue a regulation requiring radon in mines to be vented to the outside to reduce mine workers' exposure. EPA, on the other hand, planned to issue a regulation prohibiting the venting of radon from mines so as to protect the surrounding communities. OMB brought the agencies together to resolve this obvious conflict.[Endnote 11]

Need for Change

Under the current ad hoc coordination process, coordination does not occur at the proper levels on a number of problems that could benefit from it.

OMB's rule-by-rule review process, although it does catch some problems and is an important method of executive oversight, is neither a comprehensive nor an efficient method for coordinating regulatory policy. By the time a rule gets to OMB, policy options are already limited and agencies are heavily invested in proceeding with their rules. Additionally, OMB's rule-by-rule review by itself tends to force policy development and coordination into the often overheated context of the development of a single rule or issue. This can result in reactive and fragmented policy development that inhibits the government's ability to coordinate broad-reaching regulatory policy issues effectively.

Lack of coordination creates numerous problems. First and foremost are problems of duplicative or conflicting regulations. Also, agency expertise is called into question when different agencies produce different decisions about, for example, a chemical's hazard. Lack of coordination also can waste agency money if it results in a series of reinventions rather than an exchange of experiences and information.

The existing division of responsibility within the government also causes less obvious problems. Grouping regulators by expertise (e.g., worker safety, product safety, environment) facilitates issuing regulations, but can interfere with compliance. For instance, regulations from different agencies are not usually coordinated in such a way that a process or product need only be changed once to take into account several regulatory changes. In fact, it is difficult to do this within one agency or department, much less between or among departments.

--It took the intervention of the Office of the Secretary of Transportation to get the Federal Aviation Administration (FAA) and NHTSA (both within DOT) to adopt regulations for child safety seats that could meet aircraft and car safety seat requirements. Otherwise, airplane trips would have required parents to bring along two child seats--one for the plane ride and one for the car trip.

--In a recent rulemaking for the pulp and paper industry, EPA addressed water and air pollution regulations simultaneously--an important improvement in the way the agency does business.[Endnote 12] The fact that this is the exceptional way of regulating, rather than the norm, illustrates how far government agencies have to go in looking at the picture from the regulated entity's viewpoint.

Lack of coordination also results in less serious inefficiencies. Exchanging information on the rulemaking process could help agencies help each other. For example, some offices in EPA have been using direct final rulemaking for 10 years as a way of streamlining procedures and reducing unnecessary paperwork for minor rules. When staffs from other agencies were told of this process, many expressed interest in using the idea or adapting it slightly as needed for their particular circumstances.

The Carnegie Commission on Science, Technology, and Government recently identified lack of coordination as a significant problem in our country's efforts to control environmental and other risk-related hazards. It noted that "[w]orse probably than the occasional high-profile mistake is the sum of the myriad inefficiencies and inconsistencies that result from lack of interagency communication, any one of which by itself might be considered minor."[Endnote 13]

A systematic, but short-lived, attempt at comprehensively coordinating regulatory policy was made during the last two years of the Carter Administration. After a successful forum was created among EPA, OSHA, CPSC, and FDA (known as the Interagency Regulatory Liaison Group), President Carter created the United States Regulatory Council late in 1978 to coordinate and improve regulations. [Endnote 14]

The Council had a variety of projects aimed at increasing the use of innovative approaches to regulation and at coordinating regulatory efforts among agencies. It started a calendar of federal regulations. It issued a set of pamphlets on innovative approaches to regulation.[Endnote 15] Coordination was attempted in several ways. Several projects looked at how regulation and other government actions affected specific industries (e.g., the auto and coal industries). One project looked at a science policy issue that cut across several agencies. Another project looked at how government regulation was viewed by citizens in a small city, Janesville, Wisconsin. Although the Council's projects were not equally successful, and the Council was not in operation all that long, it was moving in the right direction. People involved with the Council liked the fact that the agencies set the agenda, and it was seen as a way for the agencies to help themselves improve regulation.[Endnote 16] The Council was disbanded shortly after President Reagan took office.[Endnote 17]

Action

  1. Create an interagency Regulatory Coordinating Group to share information and coordinate approaches to regulatory issues. (2)

The President should establish an interagency Regulatory Coordinating Group (RCG) to provide agencies with a mechanism to share information and coordinate approaches to regulatory issues. The regulatory review executive order should create such a group and name the Administrator of OIRA as the Chair. The Group should be composed of political appointees or their designees from the key domestic regulatory agencies and certain key White House advisors.

MISSION OF THE RCG. The RCG's mission should be to provide a forum for agencies to discuss issues of common concern, to assist agencies in finding more innovative approaches to regulation and better methods of developing regulation, and to improve coordination of regulatory policies. Meetings of the RCG should allow high-level regulators to discuss specific problems they are confronting and seek advice from similarly situated peers.[Endnote 18] The RCG should also decide what issues the Group should address and, as needed, establish task forces or working groups (including identifying a lead agency, designating which agencies and types of representatives should participate, and setting a goal for the group).

The RCG could also be used as a forum to identify areas requiring coordination of two or more agencies on program development (similar to the joint efforts now underway on lead and pesticides). However, the RCG should not necessarily oversee this coordination or resolve substantive conflicts. Once the area and relevant agencies have been identified, the affected agencies should establish the proper structure for coordination and would not necessarily report back to the RCG.

STRUCTURE OF THE RCG. The RCG itself needs to be composed of political appointees or their designees. Without high level support and direction, agency staff would be unlikely to spend the necessary time on RCG projects. Only political appointees or their designees can speak authoritatively for each agency, decide on the issues to which the agencies will commit resources, reach consensus on policies coming from the working groups, and direct implementation of recommendations.

The RCG should accomplish most of its work by acting as an umbrella organization with task forces or working groups addressing specific issues. The task forces could be political appointees or career staff or both, depending on the goal of the task force. Representatives from different levels and disciplines within the agencies should needed to address different tasks. For some issues, it might be best for working groups to present a consensus view. In other situations, the best result might be a full statement of opposing views with the points of contention highlighted.

The primary staff work for the RCG should be done by agency staffs in the task force or work group structure. This would allow agency experts who deal with a specific issue on a routine basis to compare notes with experts from other agencies. Resolution of scientific issues, for example, is done better by scientists who can critique each other's work. Similarly, improving agency/congressional relationships would probably best be handled by a task force of agency liaisons to Congress.

ISSUES FOR THE RCG. The RCG's tasks should include the following:

--Actively encouraging the use of innovative approaches to regulation. It should oversee the development of the Deskbook on Regulatory Design and identify innovative regulators from the agencies who can serve as resources for other regulators to contact for assistance in developing innovative approaches.[Endnote 19] An RCG group should also work with Congress to improve understanding of the merits and limits of innovative approaches.

--Considering substantive policy areas that are in need of coordination (e.g., risk prioritization, valuation of lives saved or injuries avoided, measurement of future costs or benefits, valuation of eco-systems, and cost-benefit analysis).

--Considering ways to improve the rulemaking process (e.g., increasing public participation, using information technology, removing procedural barriers, and improving agency/ congressional relationships).

--Looking at ways for agencies to help people comply with regulations and to increase compliance through innovative means, such as sampling and auditing.[Endnote 20]

CROSS-REFERENCES TO OTHER NPR ACCOMPANYING REPORTS

Environmental Protection Agency, EPA02: Streamline EPA's Permit Program.

Department of Health and Human Services, HHS03: Develop a National, Uniform Inspection System to Ensure a Safe Food Supply.

National Science Foundation/Office of Science and Technology, NSF01: Strengthen Coordination of Science Policy.

Rethinking Program Design, DES01: Activate Program Design as a Formal Discipline.

Streamlining Management Control, SMC04: Increase the Effectiveness of Offices of General Counsel.

ENDNOTES

  1. For example, different agencies implicitly use different values for life in determining the monetary benefits of a rule. Administrative Conference of the United States (ACUS), "Valuation of Human Life in Regulatory Decisionmaking," Recommendation 88-7, 1 C.F.R. 305.88-7.
  2. Mayer, Caroline E., "Chocolate Industry's Bittersweet Tale of Conflicting U.S. Rules," Washington Star (October 24, 1980); and U.S. Regulatory Council, internal memorandum, "Chocolate Manufacturers Association Complaint About Apparent Conflict Between FDA and OSHA Regulations," undated.
  3. National Performance Review (NPR) is recommending the creation of a single food safety agency. See NPR Accompanying Report, Health and Human Services, "HHS03: Develop a National, Uniform Inspection System to Ensure a Safe Food Supply."
  4. Telephone interview with Ellis Goldman, Director, Division of Program Management, Office of Lead-Based Abatement and Poisoning Prevention, Department of Housing and Urban Development, August 18, 1993.
  5. The planning required by Executive Order 12498 (see Introduction to this report) has proven less than useful. Discussions with regulatory officials from various agencies, convened at the Department of Transportation (May 13, 1993); and Elliott, Donald, "TQMing OMB: Or Why Regulatory Review Under Executive Order 12291 Works So Poorly and What President Clinton Can Do About It," draft, August 17, 1993, p. 24, forthcoming in Law and Contemporary Problems, vol. 57 (1994). Review by the Office of Management and Budget (OMB) as a means of executive oversight of rule development was not specifically addressed by NPR because a special working group in the Clinton administration was addressing this issue, as explained in the Introduction.
  6. Kenworthy, Tom, and John Schwartz, "3 U.S. Agencies Announce Joint Commitment To Cut Pesticide Use," Washington Post (June 26, 1993), p. A5.
  7. Since the 1960s, ACUS has served as the government's in-house advisory agency and clearinghouse on administrative procedure. Its membership of 101 government and private-sector procedural experts debate and adopt advisory recommendations to the executive branch and Congress on procedural reforms. See 5 U.S.C.A. 591-596 (1993 Supp.).
  8. Office of Science and Technology Policy, Chemical Carcinogens: A Review of the Science and Its Associated Principles (February, 1985), 50 Federal Register 10371-10442 (1985).
  9. Scientists researching various aspects of the problems posed by lead shared information before any formal mechanism was established for interagency coordination on this issue. Telephone interview with Ronnie Levin, Chief, Water Team, Office of Science Planning and Regulatory Evaluation, Environmental Protection Agency, July 22, 1993.
  10. Telephone interview with Dr. Paula Cohen, Senior Regulatory Analyst, Animal and Plant Health Inspection Service, Department of Agriculture, August 13, 1993.
  11. Letter from S. Jay Plager, Administrator, Office of Information and Regulatory Affairs, to Jennifer Dorn, Assistant Secretary for Policy, Department of Labor, August 22, 1989.
  12. Cleland-Hamnet, Wendy, and Joe Retzer, "Crossing Agency Boundaries," Environmental Forum, vol. 10, no. 2 (March-April, 1993) p. 17.
  13. Carnegie Commission on Science, Technology, and Government, Risk and the Environment: Improving Regulatory Decision Making (Washington, D.C., June 1993), p. 64.
  14. The Regulatory Council, which was composed of 20 executive departments and 18 independent regulatory agencies, was directed "to identify and resolve conflicts in regulation, manage government-wide efforts to better measure and plan the effect of new regulations on different sectors, and to identify and eliminate barriers to more cost-effective and less burdensome regulation." United States Regulatory Council, Report From the Director (July 1980), p. 1. The member departments and agencies of the Regulatory Council were: the Administrative Conference of the United States; the Departments of Agriculture, Commerce, Education, Energy, Health and Human Services, Housing and Urban Development, the Interior, Justice, Labor, Transportation, and the Treasury; the Environmental Protection Agency; the Equal Employment Opportunity Commission; the Federal Emergency Management Agency; the General Services Administration; the National Credit Union Administration; the Small Business Administration; the United States International Trade Commission; the Veterans Administration; the Civil Aeronautics Board; the Commodity Futures Trading Commission; the Consumer Product Safety Commission; the Federal Communications Commission; the Federal Deposit Insurance Corporation; the Federal Election Commission; the Federal Energy Regulatory Commission; the Federal Home Loan Bank Board; the Federal Maritime Commission; the Federal Mine Safety and Health Review Commission; the Federal Reserve System; the Federal Trade Commission; the Interstate Commerce Commission; the National Labor Relations Board; the Nuclear Regulatory Commission; the Occupational Safety and Health Review Commission; the Postal Rate Commission; and the Securities and Exchange Commission.
  15. Project on Alternative Regulatory Approaches, Guidebook Series on Alternative Regulatory Approaches, Books 1-6 (Washington D.C., September 1981). The series includes: Overview, Book 1; Marketable Rights, Book 2; Performance Standards, Book 3; Monetary Incentives, Book 4; Information Disclosure, Book 5; and Tiering, Book 6.
  16. Interview with Doug Costle, former Chair, U.S. Regulatory Council, June 28, 1993.
  17. Batten, Donna, ed., Encyclopedia of Governmental Advisory Organizations, 1994-5, ninth ed. (Washington, D.C.: Gale Research, Inc., 1993).
  18. Members of the Regulatory Council reported that they found the Regulatory Council a very useful way to get advice from people in similar situations.
  19. The Regulatory Coordinating Group (RCG) should coordinate with the Program Design Office recommended in the report Rethinking Program Design. (See "DES01: Activate Program Design as a Formal Discipline.")
  20. One hindrance to compliance is that the government regulates and organizes its regulations by subject area (e.g., labor, equal employment opportunity, highway safety, environmental protection) rather than by industry sector (e.g., gas stations, chemical companies, auto companies). Currently, if a small business wants to find out what regulations govern its actions, it must review each of the substantive parts of the multivolume Code of Federal Regulations to determine its obligations (although there may be private services that compile this information more usefully). It would be easier for the small business if there were an industryspecific listing of what regulations apply. Compiling such a listing and making it useful may be a very complicated proposition. It might be easier to have an office that helps businesses wend their way through the regulatory maze. See, e.g., the NPR report Environmental Protection Agency, "EPA 02: Streamline EPA's Permit Program to Improve Agency Efficiency and Customer Service." The RCG should consider a pilot program to determine what is feasible. The RCG should also look at other ways to coordinate regulation by looking at regulation from the regulated entity's perspective. RCG should consider whether it would be useful to compile planned regulations by industry sector, as the Regulatory Council did for the auto industry. Also, see "REG02: Encourage More Innovative Approaches To Regulation."