[No title available]

SUMMARY: On September 30, 1993, the President signed Executive Order

No. 12866, ``Regulatory Planning and Review.'' On the same day, the

President directed the Administrator of the Office of Information and

Regulatory Affairs to monitor OIRA's review activities during the first

six months of the Executive Order and submit a report on these

activities to the President and the Vice President by May 1, 1994. The

President also directed that the report be published in the Federal

Register.

Pursuant to the President's directive, this document contains the

text of the report and an executive summary of the report, transmitted

to the President on May 1, 1994.

FOR FURTHER INFORMATION CONTACT: Don Arbuckle, Office of Information

and Regulatory Affairs, Office of Management and Budget, New Executive

Office Building, Washington, DC 20503, (202) 395-7340.

Sally Katzen,

Administrator, Office of Information and Regulatory Affairs.

May 1, 1994.

Report on Executive Order No. 12866

Executive Summary

On September 30, 1993, President Clinton signed Executive Order No.

12866, ``Regulatory Planning and Review.'' On that same day, he issued

a memorandum directing the Administrator of OMB's Office of Information

and Regulatory Affairs to ``monitor [her] review activities over the

next six months and, at the end of this period, to prepare a report on

[her] activities.'' OIRA's Report covers the implementation of

Executive Order No. 12866 from October 1, 1993, through March 31, 1994.

As set forth in greater detail in the report, implementation of the

new Executive Order is well underway. At this point, we are beginning

to see some of the changes that were envisioned in the Order. We have,

however, encountered greater delays than anticipated in implementing

some aspects of the Order. And some of the processes established by the

Order, while initiated on schedule, are still in the formative stages.

As a result, it is too early to arrive at a final judgment regarding

the success of the new system; however, the early indications are that

there is substantial improvement in the rulemaking process.

Executive Order No. 12866 clearly articulates President Clinton's

regulatory philosophy and his view of how the nation's regulatory

system should work. Most fundamentally, as the Order states in its

opening lines:

The American people deserve a regulatory system that works for

them, not against them: a regulatory system that protects and improves

their health, safety, environment, and well-being and improves the

performance of the economy without imposing unacceptable or

unreasonable costs on society; regulatory policies that recognize that

the private sector and private markets are the best engine for economic

growth; regulatory approaches that respect the role of State, local,

and tribal governments; and regulations that are effective, consistent,

sensible, and understandable.

A number of themes run through the Order. Within the Executive

Branch, it encourages cooperation and coordination among OMB and the

agencies. With respect to the public, it emphasizes openness and early

involvement by all of the interested entities, including particularly

State, local, and tribal participation in the rulemaking process.

The Order reaffirms the primacy of the agencies in the regulatory

decision-making process and sets forth principles to which they are to

adhere, to the extent permitted by law, when developing rules. At the

same time, the Order reaffirms the legitimacy of centralized review.

The process established for centralized review distinguishes between

significant and non-significant regulatory actions so as to focus

OIRA's review activities on where there will likely be the most

benefit. It also emphasizes sound and timely analysis, early and

frequent consultation, and it reduces delay and removes secrecy in the

review process by establishing time limits and disclosure requirements.

Many of the objectives of the Order have begun to be realized.

Regarding cooperation and public involvement, one of the major changes

during the six-month period is the improved relationships that have

been developed between OIRA and the agencies. While remnants of the

mistrust and hostility that often characterized relationships between

the career staffs over much of the past decade still exist, for the

most part this has been replaced with a spirit of cooperation.

Much of the credit for the improved environment goes to the newly

created Regulatory Policy Officers (RPO), high level agency officials

who represent the agency head in efforts to implement the Order and

improve the regulatory process. The RPOs work together in the

Regulatory Working Group (RWG) chaired by the OIRA Administrator and

attended by the White House Regulatory Policy Advisors--which meets

regularly to discuss regulatory issues. The RWG has proven to be a

useful forum not only for discussion of ideas and the exchange of best

practices, but also for coordinating regulatory activities that affect

more than one agency.

Regarding public participation, agencies appear to be making

efforts to engage the public earlier and more fully in the regulatory

process. For its part, OIRA has held two conferences (and is planning a

third) with representatives of State, local, and tribal governments to

improve the consultation process between them and Federal regulators.

OIRA has also taken steps to improve the participation of the small

business community in the rulemaking process. OIRA joined the Small

Business Administration (SBA) to sponsor a Small Business Forum on

Regulatory Reform in March 1994 to discuss how the regulatory process

can better address the special needs of small businesses.

With respect to the objectives of selectivity and timeliness, OIRA

received and reviewed 578 regulatory actions from October 1, 1993,

through March 31, 1994. (See Table 1.) The 578 rules received and

reviewed by OIRA for the six-month period is approximately half what it

was for comparable periods in previous years. The number of rules under

review at any given time has also shown a significant decline. For

example, on July 1, 1993 (three months before the Executive Order was

signed), 254 regulations were under review; on March 31, 1994 (six

months after the Executive Order was signed), 68 rules were under

review.

These figures reflect a longer than anticipated start-up period

during which many non-significant rules continued to be sent to OIRA

for review. This is a result of difficulties some agencies have had in

instituting internal systems to manage the listing process that is to

distinguish between significant and non-significant regulatory actions.

Where the process has been implemented it has been helpful.

In total, OIRA has received lists designating 1,624 regulatory

actions as significant or non-significant. (These rules would not all

be rules reviewed during the six-month period--and hence they all do

not appear on Appendix A--because, if they are non-significant, they

would not have been submitted for review, and even if they are

significant, they may not have been ready to be submitted for review

and reviewed during the period covered by the report.) Of the 1,624

regulatory actions, almost two-thirds were designated non-significant,

one-third significant; specifically, agencies designated (and OMB

agreed) that 1,047 (or 64%) were non-significant; 316 (or 19%) were

designated by the agency as (and OIRA agreed that they were),

significant; and the remaining 261 (or 16%), were designated

significant by OMB. Stated another way, the agency and OMB agreed with

the initial designation for 83% of the regulatory actions; in only 16%

was there a difference of view.

The definition of ``significant'' regulatory action has been the

source of much discussion both within agencies and departments and

between OIRA and the agencies (and it has been at least a partial

source of the start-up delays we have experienced). Some of the

differences may be attributable to the difference in the natural

inclinations of rule writers, who might prefer not to have another

review layer to go through, and the natural inclinations of reviewers,

who might prefer to see more, rather than fewer rules, to ensure that

everything that should be reviewed is reviewed. In any event, we have

found that the number of instances where there is an initial difference

of opinion as to significance decreases (sometimes substantially) with

the agencies' increased experience with the process. In some cases, it

is simply a function of the agencies' not knowing how much information

to provide to enable OIRA to agree that the regulation is non-

significant. In other cases, the agencies and OMB discuss the reasons

for their different judgments so that the staffs come to an

understanding and agreement on the definition of significance.

With respect to timeliness, the Executive Order establishes strict

time limits on OIRA review in most cases 90 days to balance the need

for adequate time to conduct review with the need to streamline the

regulatory process and prevent unwarranted delay. OIRA has made a

concerted effort to meet not only the letter of this requirement, but

its spirit as well, and this goal of the Order is clearly being

accomplished. Of the 578 rules received and reviewed between October

and March, only three were extended beyond the 90-day limit. Each of

these rules was extended at the request of the regulating agency to

permit completion of interagency reviews that were in fact concluded in

less than three weeks after the extension was requested.

In addition, the Order establishes disclosure requirements for both

OIRA and the agencies to increase openness, accessibility, and

accountability. On July 1, 1993, as one of her first actions, the OIRA

Administrator began making available a daily list of draft agency

regulations under review at OIRA. This was done in order to remove the

stigma of secrecy that had previously characterized regulatory review,

and to make the review process more transparent. In addition, lists and

statistics related to regulatory review for each month are compiled and

made available by early the following month. Meetings and telephone

calls with persons outside the Executive Branch on regulations under

review are now logged, and these logs are made publicly available. And

other material related to regulatory review is kept in a public file,

forwarded to the agencies, or made available upon request, in

accordance with the Order. These various disclosure procedures are

working well and have helped restore the integrity of the regulatory

review process.

Two aspects of the Executive Order--the regulatory planning

mechanism and review of existing regulations--are not covered in detail

in the report, because although both are underway and on schedule, it

is too early to judge their success. The regulatory planning process

began with an agencies policy meeting held in early April and guidance

on the process issued by the OIRA Administrator immediately after the

meeting. This began the planning cycle that will result in the

publication of the Regulatory Plan in October 1994. Regarding review of

existing regulations, agencies submitted to OIRA in late December their

plans for review of existing regulations. Several of the agencies have

published notices requesting the public to suggest candidates for

review. These and other approaches to reviewing existing regulations

are being discussed within the RWG, and further action is planned.

In the memorandum from the President, we were asked to identify any

provisions of the Executive Order that should be changed. As noted

above, it is premature to make specific recommendations. We have,

however, identified a number of issues that warrant further

consideration and that ultimately may require changes to the Executive

Order, its implementation by OIRA, or both.

The importance of regulations in our society makes it imperative

that the process by which they are developed and reviewed be

characterized by integrity and accountability. During the first six

months of Executive Order No. 12866, we have made major strides toward

these goals. We have moved the regulatory process from one criticized

for delay, favoritism, and secrecy to one that is principled,

professional, and productive. Much remains to be done, but we have made

a strong beginning.

Report on Executive Order No. 12866

May 1, 1994.

On September 30, 1993, President Clinton signed Executive Order No.

12866, ``Regulatory Planning and Review'' (attached). On that same day,

he issued a memorandum directing the Administrator of OMB's Office of

Information and Regulatory Affairs (OIRA) to ``monitor [her] review

activities over the next six months and, at the end of this period, to

prepare a report on [her] activities'' (attached). The President also

directed that ``[t]he report . . . identify any provisions of the order

that, based on [her] experience or on comments from interested persons,

warrant reconsideration so that the purposes and objectives of this

order can be better achieved.'' He directed that this report be

submitted to the Vice President and the President by May 1, 1994, and

be published in the Federal Register.

This report will describe and comment on what has occurred during

the first six months of implementation of Executive Order No. 12866

(from October 1, 1993, through March 31, 1994), and will identify

issues that could lead to suggested changes in the future. Although six

months is a short time to bring about the fundamental changes in the

Government's regulatory process envisioned by the Executive Order, the

outlines of the new system have clearly begun to emerge. In some cases,

we can point to unqualified successes; in others, we have encountered

unexpected difficulties in implementing the system. To a large degree,

it is too early to assess the success of the new system.

This report consists of four chapters. The first section introduces

the subject with a brief history of the major regulatory programs of

the U.S. Government and a general discussion of the nature of

regulation. The second chapter describes the Clinton Administration's

regulatory philosophy and the objectives of Executive Order No. 12866.

The third section describes the implementation of the Executive Order

during the first six months. The fourth section comments generally on

issues raised as a result of our experience or from comments received

from agencies and members of the public.

I. History of the Regulatory Programs of the U.S. Government

The Federal Government affects the lives of its citizens in a

variety of ways through taxation, spending, grants and loans, and

through regulation. Over time, regulation has become increasingly

prevalent in our society, and the importance of our regulatory

activities cannot now be overstated.

The History of Major Regulatory Programs

Federal regulation as we know it began in the late 19th century

with the creation of the Interstate Commerce Commission, which was

charged with protecting the public against excessive and discriminatory

railroad rates. The regulation was economic in nature, setting rates

and regulating the provision of railroad services. Having achieved some

success, this administrative model of an independent, bipartisan

commission, reaching decisions through an adjudicatory approach, was

used for the Federal Trade Commission (1914), the Water Power

Commission (1920) (later the Federal Power Commission), and the Federal

Radio Commission (1927) (later the Federal Communications Commission).

In addition, during the early 20th century, Congress created several

other agencies to regulate commercial and financial systems--including

the Federal Reserve Board (1913), the Tariff Commission (1916), the

Packers and Stockyards Administration (1916), and the Commodities

Exchange Authority (1922)--and to ensure the purity of certain foods

and drugs, the Food and Drug Administration (1931).

Federal regulation began in earnest in the 1930s with the

implementation of wide-ranging New Deal regulatory programs.

Some of the New Deal economic regulatory programs were implemented

by the Federal Home Loan Bank Board (1932), the Federal Deposit

Insurance Corporation (1933), the Commodity Credit Corporation (1933),

the Farm Credit Administration (1933), the Securities and Exchange

Commission (1934), and the National Labor Relations Board (1935). In

addition, the jurisdiction of both the Federal Communications

Commission and the Interstate Commerce Commission were expanded to

regulate other forms of communications (e.g., telephone and telegraph)

and other forms of transport (e.g., trucking). In 1938, the role of the

Food and Drug Administration was expanded to include prevention of harm

to consumers in addition to corrective action. The New Deal also called

for the establishment of the Employment Standards Administration

(1933), and of Social Security (1933) and related programs.

A second burst of regulation began in the late 1960s with the

enactment of comprehensive, detailed legislation intended to protect

the consumer, improve environmental quality, enhance work place safety,

and assure adequate energy supplies. In contrast to the pattern of

economic regulation adopted before and during the New Deal, the new

social regulatory programs tended to cross many sectors of the economy

(rather than individual industries) and affect industrial processes,

product designs, and by-products (rather than entry, investment, and

pricing decisions).

The consumer protection movement led to creation in the newly

formed Department of Transportation of several agencies designed to

improve transportation safety. They included the Federal Highway

Administration (1966), which sets highway and heavy truck safety

standards; the Federal Railroad Administration (1966), which sets rail

safety standards; and the National Highway Traffic Safety

Administration (1970), which sets safety standards for automobiles and

light trucks. Regulations were also authorized pursuant to the Truth in

Lending Act, the Equal Credit Opportunity Act, the Consumer Leasing

Act, and the Fair Debt Collection Practices Act. The National Credit

Union Administration (1970) and the Consumer Product Safety Commission

(1972) were also created to protect consumer interests.

In 1970, the Environmental Protection Agency was created to

consolidate and expand environmental protection programs. Its

regulatory authority was expanded through the Clean Air Act (1970), the

Clean Water Act (1972), the Safe Drinking Water Act (1974), the Toxic

Substances Control Act (1976), and the Resource Conservation and

Recovery Act (1976). This effort to improve environmental protection

also led to the creation of the Materials Transportation Board (1975)

(now part of the Research and Special Programs Administration in the

Department of Transportation) and the Office of Surface Mining

Reclamation and Enforcement (1977) in the Department of the Interior.

The Occupational Safety and Health Administration (1970) was

established in the Department of Labor to enhance work place safety. It

was followed by the Mining Enforcement and Safety Administration

(1973), now the Mine Safety and Health Administration, also in the

Department of Labor. The Pension Benefit Guaranty Corporation was

directed to administer pension plan insurance systems in 1974.

Also in the 1970s, the Federal Government attempted to address the

problems of the dwindling supply and the rising costs of energy. In

1973, the Federal Energy Administration (FEA) was directed to manage

short-term fuel shortage. Less than a year later, the Atomic Energy

Commission was divided into the Energy Research and Development

Administration (ERDA) and an independent Nuclear Regulatory Commission.

In 1977, the FEA, ERDA, the Federal Power Commission, and a number of

other energy program responsibilities were merged into the Department

of Energy and the independent Federal Energy Regulatory Commission.

Another significant regulatory agency, the Department of

Agriculture (1862), has grown over time so that it now regulates the

price, production, import, and export of agricultural crops; the safety

of meat, poultry, and certain other food products; a wide variety of

other agricultural and farm-related activities; and broad-reaching

welfare programs. Agriculture regulatory authorities have changed over

time, but now include the U.S. Forest Service (1905), the Farmers Home

Administration (1921), the Soil Conservation Service (1935), the

Agricultural Stabilization and Conservation Service (1961), the Food

and Nutrition Service (1969), the Agricultural Marketing Service

(1972), the Federal Grain Inspection Service (1976), the Animal and

Plant Health Inspection Service (1977), the Foreign Agricultural

Service (1974), The Food Safety and Inspection Service (1981), and the

Rural Development Administration (1990).

The consequence of the long history of regulatory activities is

that Federal regulations now affect virtually all individuals,

businesses, State, local, and tribal governments, and other

organizations in virtually every aspect of their lives or operations.

Some rules are based on old statutes; others on relatively new ones.

Some regulations are critically important (such as the safety criteria

for airlines or nuclear power plants); some are relatively trivial

(such as setting the times that a draw bridge may be raised or

lowered). But each has the force and effect of law and each must be

taken seriously.

The Nature of Regulation

It is conventional wisdom that competition in the marketplace is

the most effective regulator of economic activity. Why then is there so

much regulation? The answer is that markets are not always perfect and

when that occurs, society's resources may be imperfectly or

inefficiently used. The advantage of regulation is that it can improve

resource allocation or help obtain other societal benefits. For

example, consider the following situations:

--Certain markets may not be sufficiently competitive, thus potentially

subjecting consumers to the harmful exercise of market power (such as

higher prices or artificially limited supplies). Regulation can be used

to promote competition (for example, removing barriers to entry) and to

ensure that firms engage in fair trade practices such as the sale of

dangerous substances.

--In an unregulated market, firms and individuals may impose costs on

others--including future generations that are not reflected in the

prices of the products they buy and sell. They may pollute streams,

cause health hazards, or endanger the safety of their workers or

customers. Regulation can be used to reduce these harmful effects by

prohibiting certain activities or imposing the societal costs of the

activity in question on those causing harm. One goal of regulation is

to induce private parties to act as they would if they had to bear the

full costs that they impose on others.

--Similarly, in an unregulated market, firms and individuals may not

have incentives to provide individuals with accurate or sufficient

information needed to make intelligent choices. Firms may mislead

consumers or take advantage of consumer ignorance to market unsafe or

risky products. Regulation may be needed to require disclosure of

information, such as the possible side effects of a drug, the contents

of a food or packaged good, the energy efficiency of an appliance, or

the full cost of a home mortgage.

--Even when consumers have full information, the Government may wish to

protect individuals, especially children, from their own actions.

Regulation may thus be used to restrict certain unacceptable or harmful

practices.

--Regulation can also be beneficial in achieving goals that reflect our

national values, such as equal opportunity and universal education, or

a respect for individual privacy.

There are also many potential disadvantages of regulating, to the

Government, to those regulated, and to society at large.

--The direct costs of administering, enforcing, and complying with

regulations may be substantial. Some of these costs may be borne by the

Government, while others are paid for by firms and individuals,

eventually being reflected in the form of higher prices, lower wages,

reduced output, and investment, research, and expansion foregone.

--There are also disadvantages of regulation that are difficult to

measure, such as adverse effects on flexibility and innovation, which

may impair productivity and competitiveness in the global marketplace,

and counterproductive private incentives, which may distort investment

or reduce needed supporting activities.

In short, regulations (like other instruments of government policy)

have enormous potential for both good and harm. Well-chosen and

carefully crafted regulations can protect consumers from dangerous

products and ensure they have information to make informed choices.

Such regulations can limit pollution, increase worker safety,

discourage unfair business practices, and contribute in many other ways

to a safer, healthier, more productive, and more equitable society.

Excessive or poorly designed regulations, by contrast, can cause

confusion and delay, give rise to unreasonable compliance costs in the

form of capital investments and on-going paperwork, retard innovation,

reduce productivity, and accidentally distort private incentives.

The challenge for regulators is to approach their task with an

appreciation and respect for the complexity of the problems they must

solve and the diversity of the individuals and institutions their work

affects. In doing this, they need to balance a number of conflicting

objectives, to apply sensitivity and judgment to the best available

information, and ultimately to achieve the most effective means to the

desired ends. The efforts to do this, especially in the recent past,

have not been particularly successful, and the American people have

indicated their irritation, if not anger, at the maze of inconsistent,

duplicative, and excessive rules that can cause more harm than good.

Executive Order No. 12866 was developed to bring the Government

back to the task at hand--to design sensible regulations that improve

the quality of our life without imposing unnecessary costs and to do so

in a way that is efficient, fair, and accountable to the American

people.

II. The Objectives of Executive Order No. 12866

Executive Order No. 12866 clearly articulates President Clinton's

regulatory philosophy and his view of how the nation's regulatory

system should work. Most fundamentally, as the Order states in its

opening lines:

The American people deserve a regulatory system that works for

them, not against them: a regulatory system that protects and improves

their health, safety, environment, and well-being and improves the

performance of the economy without imposing unacceptable or

unreasonable costs on society; regulatory policies that recognize that

the private sector and private markets are the best engine for economic

growth; regulatory approaches that respect the role of State, local,

and tribal governments; and regulations that are effective, consistent,

sensible, and understandable.

The Order sets out specific goals:

The objectives of this Executive Order are to enhance planning and

coordination with respect to both new and existing regulations; to

reaffirm the primacy of Federal agencies in the regulatory decision-

making process; to restore the integrity and legitimacy of regulatory

review and oversight; and to make the process more accessible and open

to the public.

In its first section, Executive Order No. 12866 sets forth the

specific philosophy and principles that are to govern regulatory

development. This is worth quoting at this point because it so

succinctly describes the philosophy that the Order is established to

implement:

Federal agencies should promulgate only such regulations as are

required by law, are necessary to interpret the law, or are made

necessary by compelling public need, such as material failures of

private markets to protect or improve the health and safety of the

public, the environment, or the well-being of the American people. In

deciding whether and how to regulate, agencies should assess all costs

and benefits of available regulatory alternatives, including the

alternative of not regulating. Costs and benefits shall be understood

to include both quantifiable measures (to the fullest extent that these

can be usefully estimated) and qualitative measures of costs and

benefits that are difficult to quantify, but nevertheless essential to

consider. Further, in choosing among alternative regulatory approaches,

agencies should select those approaches that maximize net benefits

(including potential economic, environmental, public health and safety,

and other advantages; distributive impacts; and equity), unless a

statute requires another regulatory approach.

Regulatory Principles

The Order then lists 12 principles of regulation (Section 1(b))

that, to the extent permitted by law, agencies are to follow when

considering and developing regulating. These principles can be viewed

as a series of questions to be raised by the agency, begins with

identifying the problem the agency is trying to solve or the situation

it is trying to change. How serious is it, compared with other problems

the agency faces? What will this proposed regulation do? How sure is

the agency that it will do it? Will the proposed regulation have any

unintended benefits? Any unintended costs? Create any counterproductive

private incentives? Is there any other approach that would achieve the

same objective better? Is there a way of modifying the proposed

regulation to achieve greater benefits for the same costs or to achieve

the same benefits for fewer costs?

Two themes emerge from these principles: the need for data and for

analysis, particularly of alternative ways to solve the problem. It is

the responsibility of regulators to obtain and rely on the best

reasonably obtainable scientific, technical, or economic data, as may

be called for in a particular instance. The data should be assembled

and analyzed objectively, without preconceived notions of the outcome.

At the same time, it is clear that as the state of scientific knowledge

advances, technology develops and changes, and economic forecasts are

revised, there may be legitimate disputes about what constitutes the

best available data. That being the case, the quest for the best should

not be the enemy of the practicable.

It is also the responsibility of regulators to be disciplined in

analyzing the benefits and costs of proposed regulations and

alternative ways of solving the problem, so that they can attest not

only that the benefits of their regulations outweigh their costs, but

also that their regulations are designed in the most cost-effective

manner possible. Such a statement of principle would not seem to be

controversial, yet the use of benefit-cost analysis has been one of the

most contentious issues in the regulatory arena during the last twelve

years.

Those who criticize benefit-cost analyses believe that it is often

difficult (or even impossible or morally improper) to quantify or place

a dollar value on such benefits as lives saved, improved air quality,

or reduced discrimination. Others believe that while it may be

difficult to quantify or place a dollar value on certain costs--such as

reduced flexibility, the loss of innovation, or counterproductive

incentives to cheat--generally costs are easier to measure than

benefits, so that undertaking a benefit-cost analysis will, they

believe, skew the decision-making process against the adoption of

needed regulations.

While there is no easy response to these concerns, the Executive

Order stresses not only that the anticipated effects of a regulation

should be quantified to the extent possible, but also that those that

cannot be quantified--whether they be benefits or costs--should

nevertheless be considered. This underscores that the decision-maker

should consider all of the anticipated effects in deciding whether, on

balance, society as a whole will benefit from the proposed regulatory

action.

Responsibilities of the Various Participants

How these objectives are to be incorporated into a regulatory

system is the subject of the rest of the Executive Order. It begins by

affirming the primacy of the regulatory agencies, the legitimacy of

centralized review, and the areas of responsibilities for each.

The process of developing regulations must begin with the agencies

to which Congress has assigned statutory regulatory authority and

responsibilities. These agencies are the repositories of significant

substantive expertise and experience in a particular field. An agency's

activities are sometimes driven by statutory mandates; there is also

frequently a substantial amount of discretion involved. In either

event, it is the agency itself that must be responsible for carefully

identifying the problem to be addressed, analyzing the source of the

problem (including whether existing regulations or other laws have

created, or contributed to, the problem and whether those regulations

or other laws can be modified to achieve the regulatory goals more

effectively), assessing the importance of that problem, and determining

the proper solution to it.

The Order assigns the task of centralized review to OMB's OIRA,

which in the words of the Executive Order, is the ``repository of

expertise concerning regulatory issues, including methodologies and

procedures that affect more than one agency, this Executive Order, and

the President's regulatory policies.'' With such expertise, OIRA's role

is to ``ensure that regulations are consistent with applicable law, the

President's priorities, and the principles set forth in this Executive

Order, and that decisions made by one agency do not conflict with the

policies or actions taken or planned by another agency.'' (Section

2(b).)

The Vice President is designated as ``the principal advisor to the

President on . . . regulatory policy, planning, and review.'' The Order

also names 12 White House regulatory policy ``Advisors'' who are to

assist the President and Vice President in specified tasks. These

include: (1) The Director of OMB; (2) the Chair (or another member) of

the Council of Economic Advisors (CEA); (3) the Assistant to the

President for Economic Policy (NEC); (4) the Assistant to the President

for Domestic Policy (DPC); (5) the Assistant to the President for

National Security Affairs (NSA); (6) the Assistant to the President for

Science and Technology (OSTP); (7) the Assistant to the President for

Intergovernmental Affairs (IGA); (8) the Assistant to the President and

Staff Secretary; (9) the Assistant to the President and Chief of Staff

to the Vice President (OVP); (10) the Assistant to the President and

Counsel to the President; (11) the Deputy Assistant to the President

and Director of the White House Office on Environmental Policy (OEP);

and (12) the Administrator of OIRA, who is to ``coordinate

communications relating to this Executive Order among the agencies,

OMB, the other Advisors, and the Office of the Vice President.''

(Section 2(c).)

Scope of the Executive Order

The scope of the Order is set forth in several different sections.

``Regulation'' and ``regulatory action,'' the subject of the planning

and review provisions of the Order, are defined, as are exemptions from

the definitions, such as formal rulemaking, rules pertaining to

military or foreign affairs, and rules limited to agency organization,

management, and personnel matters. (Section 3(d).) In addition, the

OIRA Administrator is given the authority to exempt any other category

of regulations. (Section 3(d)(4).) ``Regulation'' and ``regulatory

action'' are the operative terms used throughout the Order. They are

defined to include any regulatory pronouncement, regardless of form,

that has, or is expected to lead to a promulgation that has the force

and effect of law. Thus, certain guidance documents, directives,

notices of inquiry, policy statements, and the like may be included

under the Order depending on the extent to which the agency intends to

enforce their terms and conditions.

In general, the Order focusses on ``significant regulatory

actions,'' rather than all regulations or regulatory actions. This is

an important distinction between this Order and its predecessor,

Executive Order No. 12291. This Order makes clear, among other things,

that centralized review is to be focussed on the most important

regulatory actions, where OIRA's limited resources can be expected to

have maximum beneficial effect. Consistent with the spirit of the

primacy of agencies for regulatory decisions and the streamlining of

the regulatory process, the agencies themselves are solely responsible

for review of non-significant regulatory actions.

A significant regulatory action is defined to mean any regulatory

action that is likely to result in a rule 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;

(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

this Executive Order. (Section 3(f).)

The Order applies as a whole to all Federal agencies, with the

exception of the independent regulatory agencies. However, the

independent regulatory agencies are requested on a voluntary basis to

adhere to the statement of regulatory philosophy and the regulatory

principles that may be pertinent to their activities. Moreover, these

independent agencies are included within the provisions relating to the

planning process. (Section 4(b) and Section 4(c).)

Planning and Coordination

The objective of the planning process is to identify significant

issues early in the course of regulatory development so that

appropriate coordination can be conducted at the beginning of the

process rather than at the end. Specifically, the purpose of the

planning and coordinating mechanisms set up by the Order is:

[T]o provide for coordination of regulations, to maximize

consultation and the resolution of potential conflicts at an early

stage, to involve the public and its State, local, and tribal officials

in regulatory planning, and to ensure that new or revised regulations

promote the President's priorities and the principles set forth in this

Executive Order. (Section 4.)

First, the Order establishes a planning cycle that begins with a

meeting, convened by the Vice President, with the regulatory policy

advisors and the heads of agencies to discuss priorities and to

coordinate regulatory efforts to be accomplished in the upcoming year

(Section 4(a)). The Order recognizes the continued utility of the

``Unified Regulatory Agenda,'' a compilation of ``all regulations under

development or review,'' to be published as specified by the

Administrator. (Section 4(b).) The Order also calls for agencies to

develop a ``Regulatory Plan'' (Section 4(c)), a description of the

``most important significant regulatory actions that the agency

reasonably expects to issue in proposed or final form in that fiscal

year or thereafter.'' Agencies' plans are to be submitted to OIRA by

June 1st of each year, and are then to be coordinated with various

affected agencies and the regulatory policy advisors. After appropriate

consultation and coordination, the Plan is to be published annually in

the October publication of the Unified Regulatory Agenda.

Another vehicle for increased coordination and cooperation

regarding regulatory affairs among agencies and between the Executive

Office of the President and the agencies is the Regulatory Working

Group (RWG). (Section 4(d).) The RWG--which is to meet at least

quarterly--is to be chaired by the OIRA Administrator, and consist of

representatives of the regulatory policy advisors and the heads of

agencies determined to have significant domestic regulatory

responsibility. The Order sets forth specific tasks for the RWG:

To assist agencies in identifying and analyzing important

regulatory issues (including among others (1) The development of

innovative regulatory techniques, (2) the methods, efficacy, and

utility of comparative risk assessment in regulatory decision-making,

and (3) the development of short forms and other streamlined regulatory

approaches for small businesses and other entities.)

In order for agencies to implement the Order's philosophy regarding

accountability, planning, and coordination, it is necessary for a very

senior official with sufficient authority to be given responsibility

for these functions. The Order thus requires each agency to appoint a

Regulatory Policy Officer (RPO) (Section 6(a)(2)). The RPO is to report

to the agency head and is to oversee in the agency ``the development of

effective, innovative, and least burdensome regulations and to further

the principles set forth in this Executive Order.'' In most cases, the

RPO also serves as the agency's representative on the RWG.

To ensure improved coordination between the Government and the

public, the Order also requires the OIRA Administrator to meet

quarterly with representatives of State, local, and tribal governments,

and to convene, from time to time, conferences with representatives of

businesses, nongovernmental organizations, and the public to discuss

regulatory issues of common concern. (Section 4(e).)

Centralized Review Process

A large part of the Order is devoted to the processes for

implementing centralized regulatory review (Section 6), including a

mechanism for resolving disputes that may result from such review

(Section 7). In the most recent Administration, centralized review was

highly controversial and vigorously attacked by critics who believed

that it had been misused. Yet, few really challenge the notion that it

is appropriate for the President to provide an opportunity for an

appraisal--detached from the originating agency's legitimate focus on

its programmatic goals--as to whether the agency's regulatory

activities are consistent with and further the President's overall

objectives and regulatory philosophy. Centralized review also provides

an effective vehicle for ensuring that decisions made by one agency do

not conflict with policies or actions taken or planned by other

agencies--an increasingly important function as the decentralized

government takes on increasingly complex responsibilities. And

centralized review can be helpful in identifying a particular success

story, or a particular mistake, by an agency that can provide important

information for other agencies facing the same or similar problems.

Some of the problems with the way centralized review has been

implemented in the past can be reduced if the agency rule-writers and

the reviewer become engaged sooner rather than later in the regulatory

process. After an agency has spent years, and substantial intellectual

resources in producing a proposed regulation, it is difficult for it to

be receptive and responsive to comments questioning the fundamental

premises on which the regulation is based regardless of the merits of

those comments. Recognizing the benefits of advance planning and

coordination in identifying and more importantly resolving major issues

early in the process, Section 6 establishes a process that focusses on

selectivity and early determination of what is important, or

``significant.''

The process begins with the agency submitting to OIRA a list of

planned regulatory actions (Section 6(a)(3)(A)), indicating those the

agency believes to be ``significant regulatory actions'', as defined in

Section 3(f). OIRA then has ten working days to notify the agency that

it has determined that a listed regulation is a ``significant

regulatory action.'' Those regulatory actions that both OIRA and the

agency agree are not significant are not subject to review. Also, the

OIRA Administrator may waive review of any regulatory action designated

by the agency as significant.

For regulatory actions designated as significant, the agency is to

send the draft rule and an assessment of its costs and benefits to OIRA

for review. Additional and more extensive analysis is necessary if the

rule is ``economically significant.'' (A regulatory action is

economically significant within the meaning of the Executive Order if

it appears that it will ``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.'' (Section 3(f)(1).) For an economically

significant rule, the agency, unless it is prohibited by law, is to

submit with the rule an assessment, including the underlying analysis,

of the anticipated benefits, the anticipated costs, and of the costs

and benefits of ``potentially effective and reasonable feasible

alternatives.'' (Section 6(a)(3)(C).)

Section 6 also seeks to eliminate unwarranted delays in the

regulatory review process by establishing deadlines within which OIRA

must complete its review. (Section 6(b)(2).) For preliminary regulatory

actions prior to a Notice of Proposed Rulemaking, such as a notice of

inquiry or advance notice of proposed rulemaking, OIRA must conclude

review within 10 working days. For most submissions, OIRA must conclude

review within 90 calendar days, except that if OIRA has previously

reviewed a submission and there is no material change at its next

stage, OIRA must complete its review within 45 days. In some cases

extensions of review may be needed. The Order allows the review period

to be extended upon written approval of the Director of OMB or at the

request of the agency head. Finally, if the OIRA Administrator returns

a regulatory action to the agency for further consideration, this

action is to be done in writing and is to include an explanation for

the return, including the pertinent provision of the Order that is the

basis for the return.

Openness: Public Involvement and Disclosure

The Order speaks not only to the relationship between the

centralized reviewer and the agencies, but also to the relationship

between both of them and the public. It is essential that the public be

involved in the rulemaking process those benefitting from, those

incidentally affected by, as well as those who might be burdened by,

the proposed regulations. The public will often be able to corroborate

the information that the agency already has in its possession, or

provide additional relevant information to the agency. The public can

also provide a useful reality check on the agency's proposal.

While the Administrative Procedure Act, 5 U.S.C. Sec. 551, et seq.,

the agency's organic statute, and the agency's internal rules provide

for public input, the Order reflects the fact that more can be done to

involve the public in the rulemaking process, particularly in the early

stages (before a formal notice of proposed rulemaking is issued).

Specifically, the Order requires each agency to ``provide the public

with meaningful participation in the regulatory process,'' including

``a meaningful opportunity to comment on any proposed regulation, which

in most cases should include a comment period of not less than 60

days.'' (Section 6(a)(1).) The Order also encourages agencies ``to

explore and, where appropriate, use consensual mechanisms for

developing regulations, including negotiated rulemaking.'' (Section

6(a)(1).) An open and easily accessible process generally improves the

basis for decision-making, increases accountability on the part of the

agency, and generally enhances the prospect for acceptance of the final

product by the regulated industry.

To increase the openness and accountability of the regulatory

review process itself, the Order sets forth certain disclosure

responsibilities for both the agencies and OIRA. After a regulatory

action has been issued, the agency is to make available to the public

the material that the Order requires to have been submitted to OIRA for

review. The agency is also to identify for the public the ``substantive

changes between the draft submitted to OIRA for review and the action

subsequently announced,'' as well as identifying those changes that

were made at the suggestion or recommendation of OIRA. (Section

6(a)(3)(E).)

OIRA too is subject to a variety of disclosure procedures. (Section

6(b)(4).) Regarding regulatory actions under review at OIRA, only the

OIRA Administrator or a particular designee is to receive oral

communications from persons not employed by the Executive Branch. If

meetings are held with such persons, OIRA is to invite a representative

from the appropriate agency to be present. Within 10 working days OIRA

will forward to the agency a copy of all written communications

received from persons outside the Executive Branch, as well as the

names and dates of individuals involved in substantive oral

communications. OIRA is also to maintain a publicly available log that

includes a notation of all written communications forwarded to an

agency and the dates, names of individuals, and subject matter

discussed in substantive oral communications between OIRA and persons

outside the Executive Branch. In addition, OIRA will make available the

status of all regulatory actions under review. Finally, after

publication or issuance of a regulatory action, OIRA will make

available all documents exchanged between OIRA and the agency during

the review.

The Order also provides a dispute resolution mechanism, in the

event that the Administrator of OIRA cannot resolve a disagreement

between or among agency heads or between OMB and an agency. (Section

7). In that event, the issue will be decided by the President or the

Vice President acting at his behest. Resolution of an issue under this

section may be requested only by the Director of OMB, the head of the

issuing agency, or the head of an agency with a significant interest in

the outcome. Such review will specifically not be undertaken at the

request of any other persons.

Review of Existing Regulations

The Order establishes an ongoing process whereby agencies will

review existing regulations (Section 5). Agencies were required to

submit to OIRA by December 31, 1993, a plan under which the agency will

periodically review its existing significant regulations to determine

whether any such rules should be modified or eliminated. The

Administrator of OIRA is directed to work with the RWG and others,

State, local and tribal governments in particular, to help pursue the

review of existing regulations. The general purpose of such review is

as follows:

[T]o reduce the regulatory burden on the American people, their

families, their communities, their State, local, and tribal

governments, and their industries; to determine whether regulations

promulgated by the executive branch of the Federal Government have

become unjustified or unnecessary as a result of changed circumstances;

to confirm that regulations are both compatible with each other and not

duplicative or inappropriately burdensome in the aggregate; to ensure

that all regulations are consistent with the President's priorities and

the principles set forth in this Executive Order, within applicable

law; and to otherwise improve the effectiveness of existing

regulations. * * * (Section 5).

III. The Implementation of Executive Order No. 12866

We would prefer to report that all the regulatory problems of the

nation have either been resolved or are on their way to being resolved

by the 6-month mark of the Executive Order. It should be no surprise,

however, that this is not the case. Improving the regulatory system of

the nation is tied to reforms that are being undertaken throughout the

government, many initiated through the Vice President's National

Performance Review. While changes are underway, most are not yet

completed; this is true also for implementation of the Executive Order.

Many of the themes that run through the Order, careful planning,

cooperation and team work within the Executive Branch, sound and timely

analysis, focusing of resources, openness and accountability, are also

being instituted across other programs of the Federal Government. In

some cases, the ability of agencies to implement changes in the

regulatory system depends on changes being made in other areas. For

example, planning and priority setting depend on the existence within

departments of offices that possess the authority to resist the natural

tendency of large agencies to seek autonomy within departments. In

other cases, there may be a tension between reform in one area and

reform in another. Sound analysis, for example, requires highly skilled

personnel and budget resources, at a time when the Federal Government

is reducing personnel and constraining budgets.

To some extent, our ability to reform the regulatory process is not

wholly within our control. Regulations are often mandated by statutes,

most of which attack a single problem without recognition that other

problems, possibly more important problems, may be implicated by the

proposed solution. Many statutes also create lengthy, often highly

detailed regulatory requirements, leaving agencies with little

discretion to establish reasonable tradeoffs between requirements, and

in some cases driving agencies to scramble in response to the statutory

(or, if they miss it, the judicially imposed) deadline of the day.

Nevertheless, we believe that we have made a very good start in

implementing Executive Order No. 12866 during its first six months in

operation, with many measurable improvements. The OMB Director and OIRA

Administrator issued guidance to the heads of agencies regarding

implementation of the Order on October 12, 1993, less than two weeks

after the Order was signed. Since then, as detailed below, both OIRA

and the agencies have been energetic in implementing the Order.

We must point out, however, that the start-up time for various

provisions of the Order has taken longer (and in some cases a lot

longer) than we anticipated. Many agencies have had to establish new

oversight mechanisms to enable them to implement provisions in the

Order. For example, the listing of significant and non-significant

rules has proven particularly troublesome for some decentralized

departments, both in terms of the internal decision-making to determine

the ``significance'' of particular rules, and in terms of clearing

those determinations with sister agencies or the Office of the

Secretary (or its equivalent).

In addition, several provisions of the Order establish processes

that will take time to implement or simply have not been used yet. The

regulatory planning process set forth in Section 4 of the Order is on

schedule, but only just now beginning. The Vice President convened the

Agencies' Policy Meeting (Section 4(a)) on April 5, 1994, and guidance

to the agencies on implementation of the Regulatory Plan (Section 4(c))

was issued by the OIRA Administrator immediately after the meeting.

Draft Regulatory Plans are not due to OIRA until June 1st, and the

first Plan will not be published until October 1994, when it will

appear with the semi-annual Regulatory Agenda.

Similarly, the review of existing regulations established by

Section 5 contemplated that agencies would submit programs under which

they would periodically review their existing significant regulations

by December 31, 1993. Several agencies, including DOT, HHS, DOE, and

DOI, included as part of their plans public notices soliciting

suggestions for regulations to be reviewed. Other approaches to

reviewing existing regulations have been discussed within the

Regulatory Working Group, and next steps are being developed.

Finally, the provision of the Order that has not yet been

implemented because it has not been used is Section 7, Resolution of

Conflicts. To date, there have been no disagreements regarding

implementation of the Order that have been raised to the President or

Vice President for resolution.

To a large extent, the first three months of the Order, October

through December 1993 were almost exclusively devoted to start-up, by

both OIRA and the agencies. During January through March 1994, the

changes created by the Order began to emerge, and now some are clearly

visible and measurable. Start-up still goes on, however, and, as will

be discussed below, it may simply be too early to tell whether the

Order is working as intended.

Cooperation and Coordination

There are a number of ways to analyze and measure the

implementation of Executive Order No. 12866. Some of the most important

changes that have been made, which nourish the spirit of the Order as

much as carrying out its letter, are intangible and difficult to

quantify. One of these is the vastly improved relationship that has

developed between OIRA and the agencies.

While remnants of the mistrust and hostility that often

characterized relationships between the career staffs over much of the

past decade still exist, for the most part this has been replaced with

a spirit of cooperation. Rule writers and rule reviewers are learning

to work together as partners rather than as adversaries. Particularly

good working relationships have evolved between OIRA and DOT, DOI, and

Education. Substantial changes are evident with DOL and EPA. In all

cases, working relationships have improved.

Differences between OMB and the agencies, including significant

disagreement on issues, continue as one would expect and as is

contemplated by the Order. But these differences, which are largely the

product of different perspectives, are functioning for the most part as

a constructive, professional tension that leads to improved

regulations.

The change toward a spirit of cooperation and teamwork has occurred

largely because it has been fostered by strong leadership within the

Administration, including that of the President and Vice President

themselves, as well as by agency heads and managers at OMB. The

Administrator of OIRA and her staff have visited many of the agencies

to meet with the senior regulatory officials and entertain comments or

answer questions about the Executive Order. More work needs to be done,

however, so the message reaches throughout the agencies. In the end,

perhaps the best antidote for any residual hostility will be several

working experiences where the career staffs work together through a

problem to produce a product that all agree is better for the effort.

Other serious efforts to improve communications, cooperation, and

coordination have now been institutionalized.

As required by the Executive Order, each agency has designated a

high level Regulatory Policy Officer (RPO) to represent directly the

agency head in efforts to implement the Order and improve the

regulatory process. (Section 6(a)(2).) Although departments have

selected different positions to perform this role, many have designated

the general counsel as the RPO. This has ensured high level agency

attention to the regulatory process and efforts to reform it.

One of the primary forums for the RPOs to work together to improve

the regulatory process is the Regulatory Working Group (RWG). The RWG

has met three times, in November, January, and March. These meetings

have been well attended by the White House advisors and the RPOs and

have served as a convenient forum for discussion of issues related to

the implementation of the Order in an organized and collegial manner.

The meetings have allowed agencies to share techniques and solutions to

common problems, and have allowed White House and agency officials to

exchange views as a group on a regular basis.

The RWG has created four sub-groups to consider specific cross-

cutting issues that affect all or many regulatory agencies: these

include benefit-cost analysis, risk assessment, streamlining the

regulatory system, and use of information technology to improve

rulemaking. The sub-groups are inclusive and any agency that is

interested has been invited to designate staff to participate. These

sub-groups have discussed informal work plans and several are in the

process of developing materials for consideration by the RWG.

An additional effort to improve working relationships between

agencies and OIRA is the Regulatory Training and Exchange Program

instituted by OIRA. Agencies have been encouraged to designate career

staff who would come to OIRA on a training detail to learn how

regulatory review is conducted and to work on RWG matters. The purpose

of the program is to provide expertise among the agency career staff in

how regulatory review is conducted so that it can be incorporated into

the working practices of the agency, as the Executive Order envisions.

This program is still in its start-up phase, but OIRA has hosted two

trainees, from USDA and DOT. Other exchange program candidates are

being sought, and are expected to undergo this training during the

summer and fall.

Openness: Public Involvement and Disclosure

Executive Order No. 12866 places special emphasis on increased

openness in the rulemaking process, particularly increased public

involvement earlier in the regulatory process. Agencies are instructed

to ``provide the public with meaningful participation in the regulatory

process * * * which in most cases should include a comment period of

not less than 60 days.'' In addition, agencies are to ``explore, and

where appropriate, use consensual mechanisms for developing

regulations, including negotiated rulemaking.'' (Section 6(a)(1).)

Agencies are also encouraged, prior to issuing notices of proposed

rulemaking, to seek the involvement of those affected by it, especially

State, local, and tribal officials.

It is difficult to know how much advance consultation is taking

place. However, with all but a few well justified exceptions, agencies

are allowing 60 days for public comment. Regarding regulatory

negotiation, on the same day that the President signed the Executive

Order, he also signed a memorandum to agency heads further encouraging

the use of consensual mechanisms and directing each agency, by December

31, 1993, to identify to OIRA at least one candidate for a regulatory

negotiation during the upcoming year, or explain why the use of such a

process would not be feasible. Agencies provided these candidates to

OIRA on time, or very shortly after the deadline, and many agencies are

currently undertaking regulatory negotiations. To assist with the

learning process, OIRA joined with the Administrative Conference of the

U.S. (ACUS) to sponsor a program for agency officials, which was held

on November 29, 1993, on how to do regulatory negotiation, using

expertise and materials that ACUS staff have assembled over the past

decade.

As noted above, OIRA has its own responsibilities to meet with

various affected entities. OIRA has held two conferences with

representatives of State, local, and tribal governments one in December

1993, the second in March 1994. The first conference, chaired by the

OIRA Administrator and attended by about 100 persons, consisted of

three panel discussions: an overview of the regulatory partnership;

regulatory burdens and how they may be reduced; and involving all

affected entities in regulatory development. The panels and audience

consisted of representatives from State, county, town, and tribal

governments; academics; association representatives, for example from

the National Association of Counties, the National Governors'

Association, the National Association of Towns and Townships, the

National Association of American Indians, and the Advisory Commission

on Intergovernmental Relations; and agency intergovernmental affairs

office representatives.

The second conference, also chaired by the OIRA Administrator, was

a working session devoted to discussion of consultations between the

Federal government and State, local, and tribal officials regarding

unfunded nonstatutory mandates. This session brought together at one

table general counsels from several major regulatory agencies and

various State, local, and tribal governmental officials to discuss how

to improve the consultative process called for in Executive Order No.

12875, ``Enhancing the Intergovernmental Partnership''.

These conferences are the beginning of a significant and continuing

effort by this Administration to ensure that more effective working

relationships among the Federal, State, local, and tribal governments

are institutionalized. A third conference is tentatively scheduled for

early June. We have asked representatives of the major State, local,

and tribal associations for suggested topics or formats for this and

other conferences to be scheduled on a regular basis.

OIRA has also taken steps to improve the participation of the small

business community in the rulemaking process. OIRA joined the Small

Business Administration (SBA) to sponsor a Small Business Forum on

Regulatory Reform in March 1994 to discuss how the regulatory process

can better address the special needs of small businesses. The Forum,

chaired by the OIRA Administrator and the Administrator of the SBA,

brought together high level officials from regulatory agencies that

significantly affect small businesses--EPA, DOT, IRS, DOL, DOJ, and

FDA--to listen to small business owners discuss their concerns

regarding Federal regulations. This Forum was followed by work session

meetings focussed on five industry sectors--chemical and metals; food

processing; transportation and trucking; restaurants; and

environmental, recycling, and waste disposal--that have been attended

by both relevant agency officials and small business representatives. A

second conference, to discuss the results of these work sessions, will

be scheduled later this summer.

While the regulatory review process conducted by OIRA cannot

displace the agencies' responsibilities to seek and accommodate public

input in rulemaking, OIRA is charged with conducting its work so as to

``ensure greater openness, accessibility, and accountability in the

regulatory review process.'' (Section 6(b)(4).) On July 1, 1993, as one

of her first actions, the OIRA Administrator began making available a

daily list of draft agency regulations under review at OIRA. This was

done in order to remove the stigma of secrecy that had previously

characterized regulatory review, and to make the review process more

transparent. Now, the fact that a rule is under review at OIRA, or

``pending,'' is public information available to anyone who seeks it.

The completion of review is also made public. On the pending list,

the date of completion of review for any regulation pending that month

is indicated. Lists and statistics for each month are compiled and made

available by the tenth day of the following month. This information

includes a list of all rules on which review was concluded the previous

month, showing agency, title, an identification number, date received,

date review completed, type of rule (e.g., proposal, final, etc.), and

OIRA action taken (e.g. found consistent with the Order without change,

with change; withdrawn; returned to agency; etc.). In addition, there

is a list of all economically significant rules reviewed. Finally, this

monthly compilation includes aggregate statistics on reviews for the

month and for the calendar year, including the number of reviews by

agency, OIRA action taken, and average review time.

As provided for in the Executive Order, meetings and telephone

calls with persons outside the Executive Branch on regulations under

review are now logged, and these logs are made publicly available.

Entries for meetings include the date, the attendees, and the subject

matter discussed. An agency representative is invited and almost always

attends such meetings. Any written materials provided by the outside

person(s) are made publicly available, and, if an agency representative

is not in attendance, are provided to the agency.

The OIRA meetings log contains 36 entries, for meetings that

occurred between July 19, 1993, and March 31, 1994. In all but two, the

OIRA Administrator chaired the meetings; in these two, other officials

in the Executive Office of the President acted as chair. An agency

representative attended all but four meetings. Usually the meetings

were with persons outside the Federal Government, but in several

instances the attendees included Congressional representatives. Most of

the meetings were devoted to EPA regulations, 30 of the 36. The other

meetings concerned a DOC/NOAA rule and several FDA and USDA food safety

regulatory actions.

Any material sent to OIRA on rules being reviewed from anyone

outside the Executive Branch is kept in a public file. In addition, if

the material is not merely a copy of documents already sent to the

agency, a copy is forwarded to the agency. Finally, documents exchanged

between OIRA and the agency during the review, including the draft rule

submitted for review and changed pages, are made available to anyone

requesting them after the rule has been issued (or, if it is not

issued, after the agency has announced its decision not to issue the

rule).

These various disclosure procedures are working well and have

helped restore the integrity of the regulatory review process.

Communications with outsiders are controlled and disclosed, but

apparently this has not had the result of discouraging such

communications. Also, the results of the review process itself are

disclosed, making OIRA clearly accountable for its actions.

Regulatory Review Statistics

The statistics maintained by OIRA of the regulatory review process

provide another means of measuring the implementation of the Executive

Order. Indeed, these statistics respond directly to most of the

questions raised in the President's September 30, 1993, memorandum to

the OIRA Administrator. In this memorandum, he directed the

Administrator:

To monitor your review activities over the next six months and, at

the end of this period, to prepare a report on your activities. This

report shall include a list of the regulatory actions reviewed by OIRA,

specifying the issuing agency; the nature of the regulatory action * *

*; whether the agency or OIRA identified the reviewed regulatory action

as ``significant,'' within the meaning of the order; and the time

dedicated to the review, including whether there were any extensions of

the time periods set forth in the order, and if so, the reason for such

extensions.

OIRA received and reviewed 578 regulatory actions from October 1,

1993, through March 31, 1994. Appendix A lists these rules, indicating

the originating department and/or agency, the review time in days, the

nature of the regulatory action (e.g., Proposed Rule, Final Rule,

etc.), the rules designated significant by the agency and those

designated by OIRA, the rules for which review was extended, and the

title of the rule. Table 1 summarizes information about these rules by

agency, including the number of rules and average review time for rules

in the ``economically significant'' and ``other than economically

significant'' categories. It also indicates the OIRA action taken by

agency.\1\

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\1\On October 1, 1993, OIRA also had 175 rules under review that

had been submitted under Executive Order 12291. Table 2 summarizes

the data on these rules. On average, these rules were reviewed in 76

days. Review was concluded on the last of these pre-Executive Order

No. 12866 rules on 1/13/94.

Also, on March 31st, 68 rules that had been submitted between

October 1st and March 31st were still under review. Table 3

summarizes the pertinent data on these rules. 45 rules (or 66%), had

been under review for under 30 days; 66 (or 97%, had been under

review less than 90 days. Three (or 3%), had been under review over

90 days, and had been extended.

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Table 1 indicates that of the 578 rules reviewed, 63 (11%) were

economically significant (or ``major,'' a term from Executive Order

12291 that continued to be used until about the beginning of January).

The average review time for all the rules was 26 days, well below the

90-day limit established by Executive Order No. 12866. The 10 agencies

with the highest volume of submissions were, in order: HHS (126), USDA

(94), EPA (52), DOT (44), DOC (42), DOI (34), Education (25), HUD (25),

VA (21), and OPM (17). For about 60% of the submissions, review was

completed without change to the rule. In 30% of the cases, review was

completed with change. 4.5% of the rules were withdrawn by the agency;

2% were returned because they were sent improperly; in about 3% of the

cases, mostly EPA rules, review was not concluded but was ended because

of a statutory or judicial deadline.

These statistics are affected by the fact (discussed later) that

during the start-up period, during which many non-significant rules

continued to be sent to OIRA for review. Once the process is fully

implemented and agencies submit only significant rules to OIRA for

review, the total number of rules is likely to decrease, as will the

percentage of rules for which review is concluded without change. At

the same time, as only the more important rules become the focus of

OIRA's review, average review time is likely to increase. We will be

watching these indicators closely during the coming year.

Of the 578 individual rules listed in Appendix A, three rules were

extended beyond the 90-day limit, all at the request of the agency to

permit interagency coordination to be completed. Regarding the

designation of rules as ``significant,'' the list indicates which rules

were designated significant by the agency, and which were designated

significant by OMB. Of the 578 rules reviewed, a total of 238 or 41%

were designated significant in accordance with Section 6(a)(3)(A). Of

those designated significant, 166 or 70% were so designated by the

agency, while 72 or 30% were designated significant by OMB.

Listing Process

As Appendix A indicates, many of the rules reviewed were not

designated either ``significant'' or ``not significant.'' This is

because virtually all agencies needed the first two to three months of

the Order for start-up activities, and did not have in place their

listing processes until the second half of the six-month period under

review. The process was smoother for agencies that either already had

or created offices to perform the central management function necessary

for the listing process to succeed. DOT, for example, has had in place

for many years a central regulatory review office in its Office of the

General Counsel, whose function is to coordinate and review the DOT

sub-agencies' rulemaking on behalf of the Secretary. In other

instances, offices have been established to perform these functions by

Clinton appointees. The Secretary of the Department of the Interior,

for example, created an Office of Regulatory Affairs whose director

reports to the Secretary and Chief of Staff and whose job it is to

organize, monitor, and manage the Department's rulemaking activities.

The Department of Education also addressed the need for centralized

responsibility, assigning this function to its General Counsel, who

brought on board a Deputy specifically charged with regulatory

responsibilities. These agencies have done an excellent job instituting

the listing procedures.

In other instances, however, it has proven difficult to create a

centralized, departmental function capable of: collecting information

from agencies within the department on the status of regulations;

coordinating a departmental decision on significance; and managing the

submission of the result to OMB and the discussion with OMB to reach

agreement on the proper designation. Even now, after six months of

experience, some agencies have still been unable to submit a single

list to OIRA designating rules as significant or non-significant. These

agencies generally continue to submit all rules to OMB for review,

telling us that it is easier and quicker for them to do so than to go

through the process of designating rules as significant or non-

significant even though they know that the majority of their rules are

non-significant and would therefore not need to be reviewed.

These agencies are examples where internal agency coordination

needs to be improved. OIRA does not want to review non-significant

rules; more importantly, it is only when agencies are able to designate

rules as non-significant well in advance that the benefits of this

system in streamlining the regulatory processes will be realized. In

the meantime, OIRA is working with agencies to process all the rules

that are submitted, accommodating as much as possible the difficulties

agencies are experiencing starting up their systems.

OIRA initially envisioned that agencies would send lists

designating rules significant or non-significant every 30 or 60 days.

It is now clear that for some agencies, lists may be needed more often;

for others, less often; and for some, at irregular intervals. The

process should remain informal and flexible to respond to differences

among the agencies and to changing circumstances within some agencies.

For example, DOC's National Marine Fisheries Service must sometimes

modify Federal fishery management plans on only several weeks, and

indeed sometimes on several days, notice. Speed in the listing process

is therefore critical. Also, in some instances, agencies have preferred

to submit informal drafts of lists to OMB so that discussions can take

place and additional information be exchanged before the lists are

finalized. We do not want to discourage any opportunities for early

exchanges of information, and therefore it has worked with the agencies

to sort through the various informal lists they are able to provide.

In total, OIRA has received lists designating 1,624 rules as

significant or non-significant. (These rules would not all be listed in

Appendix A because, if non-significant, they would not have been

submitted for review, and if significant, they may or may not have been

ready to be submitted for review within the six-month period covered by

this report.) Of the 1,624 regulatory actions, agencies designated, and

OIRA agreed, that 1047, or 64% were non-significant; 316, or 19% were

designated by the agency as, and OIRA agreed they were, significant;

and the remaining 261, or 16%, were designated significant by OIRA.

Stated another way, the agency and OIRA agreed with the initial

designation for 83% of the cases; in only 16% was there a difference of

view.

These aggregate data mask the fact that for most agencies the

number of instances where there is an initial difference of opinion

between the agency and OIRA as to significance decreases as the agency

gains experience with the process. In some cases it is simply a

function of the agencies not knowing how much information to provide to

enable OIRA to agree with the agency designation. In all cases,

differences have diminished with time as the agencies and OMB discuss

the reasons for the different perspectives and develop an understanding

and agreement on the definition of significance.

OIRA's experience implementing this listing provision of the

Executive Order has provided some valuable lessons. In some cases, the

difficulties described above are symptomatic of agency processes that

are broken and need to be fixed. But it is also true that the Executive

Branch is characterized by great variety in agency structures,

cultures, statutory mandates, and missions. As a consequence, the

Executive Order must be flexible enough to accommodate such variety and

not seek to impose rigid constraints that may be counterproductive.

We believe that so far, the listing system that has been

implemented contains both discipline and flexibility. Both OIRA staff

and agency staff have worked to accommodate each other's needs. The

listing process is serving to focus OIRA efforts on significant rules,

promote streamlining in the rulemaking process, and establish

accountability in agencies, without creating unnecessary and burdensome

additional structures.

Selectivity

One of the purposes of the Executive Order was to reduce the number

of rules submitted to OIRA for review, thereby streamlining the

rulemaking process for the agencies and allowing OIRA to focus its

limited resources on the more important rules. The start-up issues

discussed above have clouded to some extent a clear measure of the

changes that have occurred in regulatory review since the Executive

Order was signed. Nevertheless, the intended reduction in the number of

rules reviewed under the Order is clearly demonstrated in the

statistics.

Part of the reduction is attributable to the implementation of

OIRA's authority to exempt both specific agencies and categories of

regulations from centralized review. In guidance issued to agencies on

October 12, 1993, the OIRA Administrator exempted 31 smaller agencies

and 35 categories of regulation so that OIRA review could be more

usefully focussed. (Lists of these exemptions are included with the

October 12, 1993, guidance from the OMB Director and OIRA Administrator

on implementation of the Order, attached. These lists have been updated

to exempt four additional agencies and approximately 30 additional

categories of regulations.)

Overall, the 578 rules received and reviewed by OIRA for the six-

month period is approximately half what it was in previous years.

Figure A indicates the clear decline in the number of rules OIRA

received for review, compared to the average monthly receipts for the

preceding nine months of 1993 (which is comparable to that of previous

years). The number of rules received for OIRA review decreased from an

average of about 180 per month from January through September 1993 (the

monthly average for the years 1989 through 1992 was 192), to well under

100 for January through March 1994. (Monthly figures will vary

depending on regulatory activity at agencies. Figure A shows a steady

decline from October 1993 through February 1994 and an increase for

March. April's figures are between those of February and March.)

The number of rules under review at any given time has also shown a

significant decline. On July 1, 1993, when OIRA began its disclosure of

rules under review, 254 regulations were listed as pending. On

September 30, when the President signed Executive Order No. 12866, 175

regulatory actions were pending review at OIRA. On March 31, 1993, 68

regulatory actions were pending. All these figures re-emphasize the

obvious, that OIRA is reviewing far fewer rules than in the past,

exactly as envisioned by the Executive Order.

Time Limits

The Executive Order establishes strict time limits on OIRA review,

in most cases 90 days. The purpose of such limits is to balance the

need for adequate time to conduct review with the need to streamline

the regulatory process and prevent unwarranted delay. OIRA has made a

concerted effort to meet not only the letter of this requirement, but

its spirit as well, and this goal of the Order is clearly being

accomplished.

As can be seen from both Table I and Appendix A, the average review

times for the rules submitted during the first six months of the Order

is only 26 days. This is a reduction in the average annual review time

for the past five years: 1989--29 days; 1990--28 days; 1991--29 days;

1992--39 days; 1993--44 days. (The average times were particularly high

during 1992 and 1993 because of, respectively, the Regulatory

Moratorium instituted by President Bush and the effect of the

transition to the Clinton Administration, when many agencies were

without political appointees for a significant portion of 1993.)

Notwithstanding OIRA's commitment to speed up the review process,

it is likely that the average review time will go up in the future. As

non-significant rules, which in the past had generally been reviewed

quickly and thus helped keep average review times down, are removed

from the review process, and only significant rules submitted and

reviewed by OIRA, the time necessary to complete such review may

increase. To some extent, however, average review time is no longer as

useful a measure as it was when there were no meaningful limits on

review. Since all rules, except the small percentage specifically

extended, must be reviewed within 90 days, it is compliance with that

deadline that is most important and is therefore discussed in detail

below. Nevertheless, average review time will continue to be a measure

carefully watched by OIRA in the coming year.

A quick look at Appendix A reveals that most reviews were completed

in under 30 days. This may be as a result of OIRA's still receiving

non-significant rules, or its receiving some rules on the eve of

statutory or judicial deadlines, or because OIRA and agency staffs have

consulted earlier in the process and few issues remain by the time for

formal submission. Of the 578, 408 or 71% were reviewed in under 30

days. 512 or 89% were reviewed in under 60 days. Review took greater

than 60 days for only 66 or 11% of the 578. The OIRA Administrator has

instituted an internal management system that flags for her attention

all rules still under review at their 60th day. This has ensured that

submissions do not languish on staff desks, but are raised to the

appropriate level well before the 90th day.

Appendix A and Table I also show how review times compare across

different agencies. For some agencies, the review time is skewed

because of lengthy reviews of only a small number of rules. For

example, the average time for review for OMB of 108 days was for a

single rule, which was extended. NSF's average of 84 days was for three

rules; FFIEC's average of 70 days was for a single rule. For the higher

volume regulatory agencies, review time averages ranged from 15 days

for DOT's 44 rules to 40 days for VA's 21 rules. Others fall in

between: HHS--27 days (for 126 rules); USDA--19 days (for 94 rules);

EPA--35 days (for 52 rules); DOC--16 days (for 42 rules); DOI--23 days

(for 34 rules); Ed--29 days (for 25 rules); HUD--33 days (for 25

rules); OPM--19 days (for 17 rules).

The Order permits the time for review to be extended at the request

of the agency head, or by the Director of OMB for 30 days. Appendix A

indicates that of the 578 rules received and reviewed between October

and March, only three were extended. These were: DOI's Wild Bird

Conservation Act rule, which was under review for 107 days; OMB's Cost

Accounting Standards Board Regulations, under review for 108 days; and

DOD's Civilian Health and Medical Program of the Uniformed Services

(CHAMPUS) rule, under review for 99 days. Each of these rules was

extended at the request of the originating agency. Wild Birds was

extended to permit the completion of interagency coordination between

DOI, DOJ, State and USTR. Cost Accounting Standards was extended to

allow OIRA staff to meet with the Cost Accounting Standards Board at

the Board's request. DOD's CHAMPUS rule was extended to ensure

coordination of the rule with the regulatory programs of other health

care agencies. In all these cases, extension was used to permit

completion of reviews that were in fact concluded in less than three

weeks after the extension was requested.

As of March 31st, two additional rules had been extended and were

still under review: USDA's Revisions of Farmland Protection Policy Act

(received November 9, 1993), and EPA's Lender Liability for Underground

Storage Tanks (received December 20, 1993). Also, nine rules that were

submitted before the Executive Order was signed, but for which review

was concluded after October 1, 1993, were extended after they had been

under review for 90 days in an effort to comply with the spirit of the

new Order.2

---------------------------------------------------------------------------

\2\These rules were: USDA's Export Bonus Program (review

concluded 12/7/93); DOD's Prompt Payment Act (review concluded 12/

16/93); DOC's Natural Resource Damage Assessment rule (review

concluded 12/23/93); HHS's Payment of Preadmission Service, Medicare

Program (review concluded 12/23/93); HHS's Revisions to Freedom of

Information Regulations, Medicare and Medicaid (withdrawn 12/09/93);

HHS's Medicare Coverage and Payment of Clinical Psychologists

(review concluded 12/15/93); HHS's Medicare Secondary Payment

(review concluded 1/13/94); DOE's Amendment to Workplace Substance

Abuse Programs (review concluded 12/3/93); and DOE's Workplace

Substance Abuse Programs at DOE Sites (review concluded 12/3/93).

---------------------------------------------------------------------------

Overall, OIRA's experience during the first six months with the

review time limits show them to be working well.

IV. Issues for Further Consideration

In his September 30, 1993, memorandum, the President requested that

the Administrator of OIRA ``identify any provisions of the order that,

based on your experience or on comments from interested persons,

warrant reconsideration . . . .'' There are a number of provisions that

qualify, although it is too early to say whether the problems lie with

the terms of the Executive Order, with its implementation, or some

combination of the two. As discussed above, in many cases start-up

activities implementing certain provisions of the Order are still in

progress. The process of listing rules as significant or non-

significant, for example, while well underway at most agencies is

nevertheless still in its formative stages at many other agencies. As a

result, we are not now able to judge the effectiveness of this approach

in achieving the objectives of the Order.

By the same token, we do not know if agencies are giving to non-

significant regulatory actions the review and care that they deserve.

It was anticipated that, because there would be no OIRA review,

agencies themselves would have to ensure that non-significant rules, as

well as significant regulations, meet the principles of the Order. Some

agencies have told OIRA that they are fulfilling this responsibility.

OIRA has no independent basis for confirming or denying these reports.

With time, however, there should be sufficient information to enable

informed judgment on the issue. With time, OIRA should also be able to

better evaluate the effects of earlier communication between OIRA and

agency staffs and more selective review to ensure that significant

regulations adhere to the principles of the Order. And, as noted above,

additional time is needed to evaluate the planning process and the

process for review of existing regulations.

While it is premature to recommend specific revisions to the

Executive Order, we have enough experience to suggest some areas that

are likely to require further consideration.

Review Time Limits

One such issue is the 90-day review time limit (Section

6(b)(2)(B).) In general, we have found the discipline of this limit

useful and fair. Along with the disclosure procedures, the time limits

have helped remove the stigma of secrecy and delay that have

characterized regulatory review in the past. As shown in Appendix A,

only a small percentage of the rules submitted for review are extended.

There are two types of situations, however, where the balance

between adequate review and the limits on review time is problematic.

First, OIRA's experience is that interagency coordination can sometimes

be unexpectedly lengthy. In the case of the USDA Farmland Protection

rule, for example, coordination among multiple agencies, in this case

USDA, DOT, HUD, Treasury, and GSA, has required the resolution of

significant issues at the highest levels in major regulatory

departments. As a practical matter, it takes time to arrange meetings,

define and analyze issues, circulate and coordinate exchanges between

the agencies, and negotiate solutions. It has proven extremely

difficult to keep this process moving to resolution.

The second situation is where the agency and OIRA agree that

additional analysis is necessary to meet the requirements of the Order.

In some instances, where issues are highly technical--legally,

mechanically, or economically--such analysis can take months to

complete. If this is the case, the rule is technically still under

review at OIRA, although in fact no review can be conducted--either by

OIRA or the agency--until the further data and analysis are generated.

In such cases, the time limits on review serve to discourage rather

than encourage efforts to develop the most effective, minimally

burdensome regulation.

The current mechanism to deal with such circumstances is the

provision for extension of review by either the Director or the agency

head. (Section 6(b)(2)(C).) While this provision has functioned to keep

some rules under review that might otherwise have been returned to the

agency, it gives the misleading impression that OIRA is reviewing the

rule when in fact the originating agency, or an affected agency, is

engaged in further analysis or coordination or even in some cases

simply making changes that have already been agreed to in principle by

policymakers.

There is another area where the 90-day limit may not be

appropriate--namely, an economically significant regulatory action,

which may have taken several years to develop to the proposed stage and

which arrives at OIRA with several hundred pages of detailed analysis.

Even if the OIRA and agency staffs have conferred during the

developmental stages, it is very difficult to review all of the

materials presented, and particularly to consider not only what is

presented, but also what is not (which often is equally, if not more,

important), within the 90-day limit under the best of circumstances

(e.g., no intervening statutory or judicial deadlines or agency

requests for expedited consideration of high priority agency

initiatives).

At the other extreme are those instances where review is triggered

by section 3(f)(4)--that is, a rule raises novel legal or policy issues

arising out of legal mandates, the President's priorities, or the

principles set forth in the Order. Here, if there has been advance

consultation as there should be, and other agencies are not affected,

OIRA may need very little, if any, time to conclude review.

By contrast, OIRA is often given a few days for review--even though

substantially more time is necessary--because there is an imminent

statutory and/or judicial deadline. Some agencies, notably EPA, but

also HHS, DOL, DOI and others, often must develop regulations under

severe time constraints set in statutes or arising from litigation

resulting from missed statutory deadlines. In such cases, the

discretion of the agency is often severely limited, both in terms of

time to conduct adequate analysis and discretion to devise flexible,

innovative, and cost-effective solutions to difficult problems. In some

of these cases, OIRA has received rules for review only days before a

deadline; in fact, in some cases, the agency managers themselves have

only a few days to deal with deadline cases.

While this is a serious problem, it may be beyond our ability to

remedy through the Executive Order. It is our view that highly

prescriptive legislation, including dictating time lines for

promulgating regulations, has contributed to a regulatory system that

is sometimes unmanageable or is driven by plaintiffs rather than by a

rational planning process that directs the government's limited

resources to the most important problems and the most cost-effective

solutions. However, the solution, if there is one, clearly invites the

Legislative Branch and extends beyond the issues covered in this

report.

A different problem, but one related to review time limits, is the

question of when the clock should start. OIRA has encouraged agencies

to consult early in the development of a regulatory action. This brings

the perspectives of both the reviewer and the agency to bear on the

rule early in the process, informing the regulatory development and

permitting early identification and resolution of any major policy

differences. Adequate front-end involvement is especially important

when statutory or judicial deadlines dictate a rapid pace in the

development of the rule. The starting of the clock with the submission

of a relatively complete formal draft does not encourage such advance

consultation. On the other hand, some have expressed concern that with

such advance consultation, the measurement of review time beginning

with the submission of a relatively formal draft does not accurately

state (indeed, may substantially understate) the time that OIRA has in

fact spent reviewing (in some sense) the regulatory action.

Definition of ``Significant''

Another area where further monitoring and additional thought is

warranted involves the term ``significant,'' which is the trigger for

determining whether or not there will be OIRA review. The definition of

``significant'' is not, apparently, self-executing, and argument over

its meaning has been at least partly responsible for the long start-up

time in implementing the listing process. In some cases, debate takes

place within the agency as to whether or not a rule is significant. In

some of those same cases, and in others, the debate takes place between

OMB and the agency, typically with OMB thinking that a regulatory

action which the agency initially thinks is non-significant is, in

OMB's view, significant.

To some extent these debates are part of the initial adjustment

period as the Order is implemented; some reflect residual mistrust from

the previous regulatory review system; and, some reflect the natural

tension between the agency responsible for the regulation and a

reviewing entity. But some may reflect the lack of precision

(deliberate at the time of drafting) in the definition set forth in the

Executive Order.

The uncertainty centers in particular around two of the four

criteria that define ``significant regulatory action''--the first and

the fourth. The first criterion defines what has become known as an

``economically significant'' rule. (Section 3(f)(1).) Although the

initial clause of the criterion--a $100 million annual effect on the

economy--is clear, the remainder is not as easily understood. What does

it mean to ``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''? Similarly, looking at the fourth criterion, what are

``novel legal or policy issues arising out of legal mandates, the

President's priorities, or the principles set forth in this Executive

Order''? Some have read it very narrowly; others have read it to

include everything. While it is too early to suggest specific changes

to the definition, we will be monitoring it to see if further

clarification is required.

Identification of Changes Made During Review

Another area that may warrant further consideration are sections

6(a)(3)(E) (ii) and (iii), which require the agency to identify the

substantive changes made in a regulatory action during OIRA review, and

to identify those changes made at the suggestion or recommendation of

OIRA. These provisions are intended to make the results of OIRA review

transparent to the public. Some agencies have told us they are

identifying such changes, and while we have not conducted a survey, we

have no reason to think that all are not complying with the terms of

the Order.

From our perspective, however, changes that result from regulatory

review are the product of collegial discussions, involving not only

OIRA and the agency, but frequently other White House Offices--such as

OVP, DPC, NEC, CEA, OEP, OSTP--and other agencies as well (including at

times, other sister agencies in the same department as the originating

agency). After an extended process, it is not clear that identifying

changes made at the suggestion of OIRA is accurate (if the only choice

is OIRA suggestions or agency proposals) or meaningful (if OIRA

suggestions are only those suggestions originating at OIRA rather than

at another agency). We expect to explore this subject with the agencies

and see if any further guidance is necessary or desirable.

Intergovernmental Relations

There are two areas that are touched on in the Executive Order

where perhaps more should be done. The first involves Executive Order

No. 12875. It provides, among other things, that Federal agencies that

impose nonstatutory, unfunded mandates on State, local, or tribal

government either: (1) assure that funds necessary to pay the costs of

compliance are provided by the Federal Government, or (2) describe the

extent of the agency's prior consultations with affected units of

government, the nature of their concerns, any written submissions from

them, and the agency's position supporting the need to issue the

regulation containing the mandate. The purpose of this provision is, in

part, to improve communications between the agencies and State, local,

and tribal officials, particularly those responsible for funding the

programs, and to establish a meaningful working relationship between

them where none may now exist. This is very much a part of the

philosophy of Executive Order No. 12866, and OMB has provided guidance

to the agencies that regulatory actions that contain an unfunded

mandate should be submitted to OIRA for review under Executive Order

No. 12866. Further clarification of OIRA's role in this regard could be

considered.

Small Business Concerns

The second area involves the burdens of regulation on small

businesses. Concerns voiced by the small business community have led to

a variety of proposals to increase the focus of regulators on the

unique problems of small businesses, and in particular the agencies'

compliance (or lack of compliance) with the Regulatory Flexibility Act.

5 U.S.C. 601. One suggestion is to have OIRA and the Small Business

Administration (SBA) coordinate review of agency rules to assure that

the agencies prepare and use high quality regulatory flexibility

analyses when it would be appropriate to do so. SBA could notify OIRA

of any concerns it has with an agency's regulatory flexibility analysis

within a certain time after publication (e.g., 20 days) of a notice of

proposed rulemaking, and OIRA could be authorized to direct the agency

to issue a supplemental notice raising regulatory flexibility analysis

concerns or announcing the intent to prepare a regulatory flexibility

analysis by a date certain. Other forms of collaboration are also

possible to encourage better interagency coordination and compliance

with existing law.

Post Hoc Evaluation of Rules

Finally, regulations are developed based on estimates of behavior

and events in the future. Even the best of such predictions can turn

out to be wrong. After a regulation has been issued, however, there is

little, if any, effort made to review estimates and analyses to see

what was right and what was wrong, both to change the current rule to

make it more effective and to learn how to do better analyses for

future rules. Agencies with increasingly limited staffs and new

mandates to meet have little incentive for such exercises, although

they could be critical to an efficient and effective rulemaking

program.

It is possible that the appropriate incentives could be provided by

requiring, at least in selected cases, that agencies manage their

regulations toward results. That is, a rule could be written with

specific goals, initial baselines against which to measure achievement

of these goals, and an evaluation plan, including comment by affected

parties with an expectation that based on such input and analysis the

rule would be modified to improve its effectiveness and efficiency. If

so, review of an existing regulation would become part of its

development rather than an after-the-fact exercise.

Conclusion

The importance of regulations in our society makes it imperative

that the process by which they are developed and reviewed be

characterized by integrity and accountability. Regrettably, this

Administration did not inherit such a process from the prior

Administration. On the contrary, that process was severely criticized

for delay, uncertainty, favoritism, and secrecy. Significant

improvements have been made with the implementation of Executive Order

No. 12866. While it is still too early to judge the effects of the new

Order, the regulatory process has been made more principled,

professional, and productive. The Executive Office of the President is

working in concert with the agencies and listening to the public in

order to solve problems, not pretending they do not exist.

The American people deserve a regulatory system that improves their

health, safety, and economic well-being without imposing unacceptable

or unreasonable costs on society. The regulatory system being

established by Executive Order No. 12866 demands quality, efficiency,

and accountability, and is well on its way to improving the functioning

of government, the economy and, most importantly, the quality of life

for the American people.

List of Attachments

1. Executive Order No. 12866 (This Executive Order does not appear in

this document. See 58 FR 51735; October 4, 1993).

2. Presidential Memorandum for the Administrator of OIRA dated

September 30, 1993. (This Presidential memorandum does not appear in

this document. Copies are available from the EOP Publications Office at

202-395-7332.)

3. Guidance from the Administrator of OIRA for Implementing E.O. 12866.

4. Appendix A--Executive Order 12866 Reviews October 1, 1993-March 31,

1994; Received Since October 1, 1993

5. Table 1--Executive Order Reviews October 1, 1993-March 31, 1994;

Received After October 1, 1993

6. Table 2--Executive Order Reviews October 1, 1993-March 31, 1994;

Received Prior to October 1, 1993

7. Table 3--Executive Order Reviews Pending on April 1, 1994

8. Figure A--Executive Order 12866 Receipts From Agencies

October 12, 1993.

Memorandum for Heads of Executive Departments and Agencies, and

Independent Regulatory Agencies

From: Sally Katzen, Administrator, Office of Information and Regulatory

Affairs

Subject: Guidance for Implementing E.O. 12866

The President issued Executive Order No. 12866, ``Regulatory

Planning and Review,'' on September 30, 1993 (58 Fed. Reg. 51735

(October 4, 1993)).\1\ It calls upon Federal agencies and the Office of

Information and Regulatory Affairs (OIRA) to carry out specific actions

designed to streamline and make more efficient the regulatory process.

This memorandum provides guidance on a number of the provisions of the

new Order. Undoubtedly, with experience, additional questions will be

raised, and we will attempt to respond promptly as they arise.

---------------------------------------------------------------------------

\1\This Order replaces E.O. 12291 and E.O. 12498.

---------------------------------------------------------------------------

1. Coverage

The Order as a whole applies to all Federal agencies, with the

exception of the independent regulatory agencies (Sec. 3(b)). The

independent regulatory agencies are included in provisions concerning

the ``Unified Regulatory Agenda'' (Sec. 4(b)) and ``The Regulatory

Plan'' (Sec. 4(c)). However, while the President's ``Statement of

Regulatory Philosophy and Principles'' (Sec. 1) applies by its terms

only to those agencies that are not independent, the independent

regulatory agencies are requested on a voluntary basis to adhere to the

provisions that may be pertinent to their activities.

In addition, the Order states that the OIRA Administrator may

exempt agencies otherwise covered by the Order. Appendix A is a first

cut of those agencies that have few, if any, significant rulemaking

proceedings each year; effective immediately, these agencies are exempt

from the scope of the Order.\2\ Like the independent agencies, those

agencies listed in Appendix A are requested to adhere voluntarily to

the relevant provisions of the Order, particularly the President's

``Statement of Regulatory Philosophy and Principles'' (Sec. 1).

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\2\To assure that the purposes of the Executive Order are

carried out, we may ask these agencies to review particular

significant regulatory actions of which we become aware. These

Agencies should advise OIRA if they believe that a particular rule

warrants centralized review.

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2. Designation of Regulatory Policy Officer

The Order directs each agency head to designate a Regulatory Policy

Officer ``who shall report to the agency head'' (Sec. 6(a)(2)). This

Regulatory Policy Officer is to be involved at each stage of the

regulatory process to foster the development of effective, innovative,

and least burdensome regulations. Because the Regulatory Policy Officer

will in most circumstances serve as the agency representative to the

Regulatory Working Group (see below), please provide us with the name,

mailing address, and telephone and fax numbers of your designee as soon

as possible.

3. Regulatory Working Group

The Order directs the OIRA Administrator to convene a Regulatory

Working Group consisting, in part, of the representatives of the heads

of each agency having significant domestic regulatory responsibility

(Sec. 4(d)).

Again, we have made a first cut of a list of those agencies which

should be members of the Regulatory Working Group, which is attached as

Appendix B. Some of the Departments that have separate regulatory

components may qualify for multiple representatives. Please notify us

if you believe that your Department should have more than one

representative. In suggesting additional representatives, please

identify these persons and provide us with their mailing addresses, and

telephone and fax numbers.

The Administrator is to convene the first meeting of the Regulatory

Working Group within 30 days. It is therefore essential that we have

your response as soon as possible.

4. Regulatory Planning Mechanism

The Order emphasizes planning as a way of identifying significant

issues early in the process so that whatever coordination or

collaboration is appropriate can be achieved at the beginning of the

regulatory development process rather than at the end (Sec. 4).

There are two specific planning documents discussed in the Order.

The first, the semiannual Unified Regulatory Agenda (Sec. 4(b)), is on

schedule and will be published before the end of October.

Traditionally, all agencies participate, describing briefly the

regulations under development. The Order does not call for any change

in either the scope or format of this document.

The second planning document is the annual Regulatory Plan (Sec.

4(c)), which is to be published in October as part of the Unified

Regulatory Agenda. The Regulatory Plan seeks to capture the most

important significant regulations. In advance of agencies drafting

their Regulatory Plans, the Vice President will meet with agency heads

to seek a common understanding of regulatory priorities and to

coordinate regulatory efforts to be accomplished in the upcoming year

(Sec. 4(a)). The Vice President will convene the first meeting in early

1994. Following that meeting, we will provide appropriate guidance on

the scope and structure of the submissions for the 1994 Regulatory

Plan.

As you may recall, OMB had asked in OMB Bulletin No. 93-13 (May 13,

1993) that certain agencies prepare a draft 1993 Regulatory Program

under the then applicable Executive Order No. 12498. Many agencies sent

in some or all of their proposed programs. Other agencies informed us

that they wanted to wait for the confirmation of political appointees

or the issuance of the new Executive Order. While there is now

insufficient time for all of the steps necessary to prepare a formal

regulatory plan for this year, the materials we have received will be

useful in preparing for the meeting with the Vice President and our

other coordination efforts. Those agencies that have already drafted

but not submitted materials, as well as those who wish to augment what

we have already received, are encouraged to send these materials to

OIRA.

5. Review of Existing Regulations

The Order directs each agency to create a program under which it

will periodically review its existing significant regulations to

determine whether any should be modified or eliminated to make the

agency's regulatory program more effective, less burdensome, and in

greater alignment with the President's priorities and regulatory

principles (Sec. 5). Specifically, within 90 days, agencies are to

submit to the OIRA Administrator a program establishing, consistent

with the agency's resources and regulatory priorities, the procedures

for carrying out a periodic review of existing significant regulations

and identifying any legislative mandates that may merit enactment,

amendment, or rescission (Sec. 5(a)).

We are aware that past Administrations have required agencies to

undertake similar review efforts. Some of these have been so broad in

scope that necessary analytic focus has been diffused, or needed

follow-up has not occurred. This current effort should be more

productive because it focuses only on significant regulations and the

legislation that mandates them, and because we will be looking at

groups of regulations across agencies with the help of the Vice

President and the White House Regulatory Advisers, as well as the

public.

Pursuant to the Order, we are asking each agency to send to the

OIRA Administrator within 90 days a work-plan which identifies who and

which office within the agency will be responsible for assuring that

periodic reviews take place; the criteria to be used for selecting

targets of review; the kinds of public involvement, data collection,

economic and other analysis, and follow-up evaluation that are planned;

the timetables to be applied; and, to the extent then known, the

targets selected. As the program is implemented and an agency selects

specific targets for review, please identify the specific programs,

regulations, and legislation involved. To the extent they are relevant,

we will share with you the review efforts of other agencies.

6. Centralized Review of Regulations

One of the themes in the Order is greater selectivity in the

regulations reviewed by OIRA, so that we can free up our resources to

focus on the important regulatory actions and expedite the issuance of

those that are less important. Another theme is that we are to

determine early in the process which regulations are important (the

term in the Order is--``significant''). Among other things, this will

permit agencies to conduct the needed analyses for these regulations as

part of the development process, not as an after-the-fact exercise

(Sec. 6(a)(3)(B)).

The Order defines ``significant'' regulatory actions'' as those

likely to lead to a rule (1) having an annual effect on the economy of

$100 million or more or adversely and materially affecting a sector of

the economy, productivity, competition, jobs, the environment, public

health or safety, or State, local, or tribal governments or

communities; (2) creating a serious inconsistency or otherwise

interfering with an action taken or planned by another agency; (3)

materially altering the budgetary impact of entitlements, grants, user

fees, or loan programs; or (4) raising novel legal or policy issues

(Sec. 3(f)).3 This definition is not wholly susceptible to

mechanical application; rather, in many instances, it will require the

exercise of judgment. We will work with the agencies to come to a

consensus on the meaning of this term in the context of the specific

programs and characteristics of each agency.

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\3\The Order is intended to cover any policy document of general

applicability and future effect, which the agency intends to have

the force and effect of law, such as guidances, funding notices,

manuals, implementation strategies, or other public announcements,

designed to implement, interpret, or prescribe law or policy or to

describe the procedure or practice requirements of an agency. Such

documents are normally published in the Federal Register, but can

also be made available to the affected public directly.

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To begin, we ask the appropriate personnel at each agency to work

with the OIRA desk officer(s) to develop an appropriate list of

rulemakings that are under development for submission to OIRA. For each

rulemaking, please use the format below:

DEPARTMENT/REGULATORY COMPONENT. Title: ([Indicate

significance4]; Upcoming Action: [Identify]5) Planned

Submission/Publication: [date]; RIN: [number6]. Statutory/Judicial

Deadline: [date, if any].

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\4\ State one of the following: ``Not Significant'',

``Significant'', or ``Economically Significant''. A designation as

``Economically Significant'' means that the regulatory action is

likely to result in the effects listed in the first subsection--

namely, i.e., ``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.'' A regulatory action that is considered ``Economically

Significant'' must ultimately be supported by the analyses set forth

in Section 6(a)(3)(C).

\5\ Indicate whether the upcoming regulatory action is a

``Notice of Inquiry'', ``Funding Notice'', ``ANPRM'', ``NPRM'',

``Interim Final Rule'', ``Final Rule'', or what other action it may

be.

\6\ ``RIN'' is the Regulation Identifier Number published in the

Unified Regulatory Agenda. If a RIN has not been assigned, the

agency should obtain one through the normal process by contacting

the Regulatory Information Service Center.

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[Describe briefly what the agency is intending to do and why,

including whether the program is new or continuing and, if continuing,

the significant changes in program operations or award criteria.

Briefly describe issues associated with the rulemaking, as appropriate,

e.g., impacts (both benefits and costs), interagency and

intergovernmental (State and local) effects, budgetary effects (e.g.,

outlays, number of years and awards, administrative overhead), time

pressures, and why the regulatory action is important, sensitive,

controversial or precedential. For final regulatory actions, include a

brief statement of the nature and extent of public comment, and the

nature and extent of changes made in response to the public comments.]

([Name and telephone number of program official who can answer detailed

questions])

We are not looking for a lengthy or detailed description of the

issues listed above. All we need is information sufficient to confirm

the characterization of ``significant'' or ``not significant''.

Similarly, for final regulatory actions, the description of the public

comments and changes is simply to enable us to decide whether we can

expedite or waive our review of the final rule where, for example,

there are few or no public comments and little or no substantive change

from the previously reviewed NPRM.

Under the Executive Order, within 10 working days after OIRA

receives this list, we will meet with or call your office to discuss

whether or not listed regulatory actions should be submitted for

centralized review (Sec. 6(a)(3)(A)). The purpose of this meeting is to

confirm the characterization of the proposal as ``significant'' or

``not significant,'' the characterization is important because, absent

a material change in the development of the rule, those characterized

as ``not significant'' need not be submitted for OIRA review before

publication.

OIRA will also want to discuss the timing for updates that would

identify any new regulatory actions under development. OIRA implemented

this procedure with several agencies on a pilot basis while the Order

was being drafted. We are most pleased by the results. It has in some

instances taken one or two tries to develop a process that works for a

particular agency. In most instances, submission of a list once a month

has proven sufficient for our purposes.

Once it is clear that a rulemaking warrants review by OIRA, the

process will be facilitated by your advising the OIRA staff as soon as

possible on the basic concept, direction, and scope of the rulemaking.

This will enable us to identify early the issues that we are concerned

about and to inform agency personnel of the type of analyses that OIRA

will look for when it reviews the regulatory action. All of this is

designed to make the review process more efficient and avoid last

minute problems.

When an agency submits a significant regulatory action for review,

the Order sets forth certain information that each agency should

provide a description of the need for the regulatory action, how the

regulation will meet that need, and an assessment of the potential

costs and benefits of the regulatory action, together with an

explanation of how it is consistent with a statutory mandate, promotes

the President's priorities, and avoids undue interference with State,

local, and tribal governments. This should not impose additional burden

on the agency. All of the information should have been prepared as part

of the agency's deliberative process; and much, if not all, of this

information should already be set forth in the preamble of the proposal

so as to allow more informed public comment.

If the regulatory action is economically significant (as defined in

Sec. 3(f)(1)),7 the Order sets forth additional information that

an agency must provide--an assessment of benefits, costs, and of

potentially effective and reasonably feasible alternatives to the

planned regulatory action (Sec. 6(a)(3(C)). We recognize that this

material may take different forms for different agencies. We are

reviewing our current guidance to see what changes, if any, are

appropriate. Pending the conclusion of this review, agencies should

continue to adhere to the existing OMB guidance on how to estimate

benefits and costs.

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\7\See footnote 4.

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In order to assure that the public is aware of our review under the

Order and the possible effects that this review may have had, agencies

should indicate in the preamble to the regulatory action whether or not

the regulatory action was subject to review under E.O. 12866. On the

other hand, there is no requirement that an agency document (in the

preamble or in its submissions to OIRA) compliance with each principle

of regulation set forth in the beginning of the Executive Order (Sec.

1(b)); we do, however, expect agencies to adhere to these principles

and to respond to any questions that may be raised about how a

regulatory action is consistent with these provisions of the Order.

The OIRA Administrator was given the authority to exempt any

category of agency regulations from centralized review (Sec. 3(d)(4)).

To begin with, we have decided that the previously granted exemptions

should be kept in effect, except as the Order specifically includes

them.8 Several additional exemptions have been added as a result

of our ongoing discussions with agencies. A list of current exemptions

is set forth in Appendix C. We will add to this list as experience

warrants. We urge you to contact the Administrator, or have your staff

contact your OIRA desk officer, to discuss those categories you believe

may be suitable for exemption.

---------------------------------------------------------------------------

\8\Section 3(d)(2) includes within the definition of

``regulation'' or ``rule'' those pertaining to ``procurement'' and

the ``import or export of non-defense articles and services.'' The

OIRA Administrator interprets the latter to include within the scope

of the Order the regulations of the Bureau of Export Administration,

and to exclude State Department regulations involving the Munitions

List.

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7. Openness and Public Accountability

To assure greater openness and accountability in the regulatory

review process, the Order sets forth certain responsibilities for OIRA

(Sec. 6(b)(4)). Among other things, OIRA is placing in its public

reading room a list of all agency regulatory actions currently

undergoing review. This list is updated daily, and identifies each

regulatory action by agency, title, date received, and date review is

completed.

The reading room also contains a list of all meetings and telephone

conversations with the public and Congress to discuss the substance of

draft regulations that OIRA is reviewing. Within OIRA, only the

Administrator (or an individual specifically designated by the

Administrator--generally the Deputy Administrator) may receive such

oral communications.

When these meetings are scheduled, we are asking those outside the

Executive branch to have communicated their concerns and supporting

facts to the issuing agency before the meeting with OIRA. To assure

that the matters discussed are known to the agency, we are inviting

policy-level officials from the issuing agency to each such meeting.

In addition, written materials received from those outside the

Executive branch will be logged in the reading room and forwarded to

the issuing agency within 10 working days. It will be up to each agency

to put these in its rulemaking docket.

After the regulation is published, OIRA is making available to the

public the documents exchanged between OIRA and the issuing agency.

These materials will also be made public even if the agency decides not

to publish the regulatory action in the Federal Register. In addition,

the Order directs that, after a regulatory action has been published in

the Federal Register or otherwise released, each agency is to make

available to the public the text submitted for review, and the required

assessments and analyses (Sec. 6(a)(3)(E)). In addition, after the

regulatory action has been published in the Federal Register or

otherwise issued to the public, each agency is to identify for the

public, in a complete, clear, and simple manner, the substantive

changes that it made to the regulatory action between the time the

draft was submitted to OIRA for review and the action was subsequently

publicly announced, indicating those changes that were made at the

suggestion or recommendation of OIRA (Sec. 6(a)(3)(E) (ii) and (iii)).

Should you have any questions about these matters, please call the

Administrator or one of your OIRA Desk Officers.

8. Time Limits for OIRA Review

The Order sets forth strict time limits for OIRA review of

regulatory actions. For any notices of inquiry, advance notice of

proposed rulemaking, or other preliminary regulatory action, OIRA is to

complete review within 10 working days (Sec. 6(b)(2)(A)). For all other

regulatory actions, OIRA has 90 calendar days, unless OIRA has

previously reviewed it and there has been no material change in the

facts and circumstances upon which the regulatory action is based, in

which case there is a limit of 45 days (Sec. 6(b)(2)(B)). Because of

these tight time limits, we must work closely together to ensure that

requests for clarification or information are responded to promptly.

Upon receipt of a regulatory action, we plan to take a quick look and

make certain that whatever analyses should be included are included,

and to get back promptly to the agency to ask for whatever is missing.

In some instances, a reason for OIRA review will be the potential

effect of a regulation on other agencies. In these circumstances, OIRA

will attempt to provide the affected agencies with copies of the draft

regulatory action as soon as possible. If you are aware that another an

agency has an interest in the draft regulatory action, please let us

know quickly.

We also want to stress the provision in the Order that calls upon

each agency, in emergency situations or when the agency is obligated by

law to act more quickly than normal review procedures allow, to notify

OIRA as soon as possible and to schedule the rulemaking proceedings so

as to permit sufficient time for OIRA to conduct an adequate review

(Sec. 6(a)(3)(D)).

9. Regulation Identifier Number (RIN)

We ask that each agency include a Regulation Identifier Number in

the heading of each regulatory action published in the Federal

Register.9 This will make it easier for the public and agency

officials to track the publication history of regulatory actions

throughout their life cycles and to link documents in the Federal

Register with corresponding entries in the Unified Agenda of Federal

Regulations (Sec. 4(b)) and the Regulatory Plan (Sec. 4(c)).

---------------------------------------------------------------------------

\9\The Office of the Federal Register has issued guidance to

agencies on the placement of the RIN number in their documents. See

Document Drafting Handbook, 1991 ed., p. 9.

---------------------------------------------------------------------------

* * * * *

We look forward to working with you to implement this Executive

Order. If you have any questions, please let us know. We will, of

course, provide additional guidance as experience and need dictate.

Appendix A--Agencies Exempt From E.O. 12866

Advisory Council on Historic Preservation

African Development Foundation

Alaska Natural Gas Transportation System, Office of the Federal

Inspector

American Battle Monuments Commission

Arms Control and Disarmament Agency

Board for International Broadcasting

Central Intelligence Agency

Commission of Fine Arts

Committee for Purchase from the Blind and Severely Handicapped

Export-Import Bank of the United States

Farm Credit System Assistance Board

Federal Financial Institutions Examination Council

Federal Mediation and Conciliation Service

Harry S. Truman Scholarship Foundation

Institute of Museum Services

Inter-American Foundation

International Development Corporation Agency

James Madison Memorial Fellowship Foundation

Merit Systems Protection Board

Navajo Hopi Indian Relocation Commission

National Capital Planning Commission

Office of Special Counsel

Overseas Private Investment Corporation

Panama Canal Commission

Pennsylvania Avenue Development Corporation

Peace Corps

Selective Service System

Tennessee Valley Authority

United States Metric Board

United States Information Agency

United States International Development Cooperation Agency

Appendix B--Members of the Regulatory Working Group

Department of Agriculture

Department of Commerce

Department of Defense

Department of Education

Department of Energy

Department of Health and Human Services

Department of Housing and Urban Development

Department of the Interior

Department of Justice

Department of Labor

Department of Transportation

Department of the Treasury

Department of Veterans Affairs

Environmental Protection Agency

Small Business Administration

General Services Administration

Equal Employment Opportunity Commission

Appendix C--Regulatory Actions Exempted From Centralized Regulatory

Review

Department of Agriculture

Food and Nutrition Service--Special Nutrition program notices that

revise reimbursement rates and eligibility criteria for the School

Lunch, Child Care Food, and other nutrition programs.

Food and Nutrition Service--Food Stamp program notices that set

eligibility criteria and deduction policies.

Agricultural Marketing Service--Regulations that establish

voluntary standards for grading the quality of food.

Animal and Plant Health Inspection Service--Rules and notices

concerning quarantine actions and related measures to prevent the

spread of animal and plant pests and diseases.

Animal and Plant Health Inspection Service--Rules affirming actions

taken on an emergency basis if no adverse comments were received.

Rural Electrification Administration--Rules concerning standards

and specifications for construction and materials.

Department of Commerce

National Oceanic and Atmospheric Administration--Certain time-

sensitive preseason and in season Fishery Management Plan regulatory

actions that set restrictions on fishing seasons, catch size, and

fishing gear.

Department of Education

Certain Final Rules Based on Proposed Rules--Final regulations

based on proposed regulations that OMB previously reviewed where: (1)

OMB had not previously identified issues for review in a final

regulation stage; (2) Education received no substantive public comment;

and (3) the proposed regulation is not substantively revised in the

final regulation.

Rules Directly Implementing Statute--Final regulations that only

incorporate statutory language with no interpretation.

Notices of Final Funding Priorities--Notices of final funding

priorities for which OMB has previously reviewed the proposed priority.

Department of Energy

Power Marketing Administrations--Regulations issued by various

power administrations relating to the sale of electrical power that

they produce or market.

Department of Health and Human Services

Food and Drug Administration--Agency notices of funds availability.

Food and Drug Administration--Medical device reclassifications to

less stringent categories.

Food and Drug Administration--OTC monographs, unless they may be

precedent-setting or have large adverse impacts on consumers.

Food and Drug Administration--Final rules for which no comments

were received and which do not differ from the NPRM.

Department of the Interior

Office of Surface Mining--Actions to approve, or conditionally

approve, State regulatory mining actions or amendments to such actions.

Office of Surface Mining--Approval of State mining reclamation

plans or amendments.

Office of Surface Mining--Cooperative agreements between OSM and

States.

United States Fish and Wildlife Service--Certain parts of the

annual migratory bird hunting regulations.

Department of Transportation

All Office of DOT--Amendments that postpone the compliance dates of

regulations already in effect.

Coast Guard--Regatta regulations, safety zone regulations, and

security zone regulations.

Coast Guard--Anchorage, drawbridge operations, and inland waterways

navigation regulations.

Coast Guard--Regulations specifying amount of separation required

between cargoes containing incompatible chemicals.

Federal Aviation Administration--Standard instrument approach

procedure regulations, en route altitude regulations, routine air space

actions, and airworthiness directives.

National Highway Traffic Safety Administration--Federal Motor

Vehicle Safety Standard 109 table of tire sizes.

Department of the Treasury

Internal Revenue Service, Bureau of Alcohol, Tobacco, and Firearms,

and Customs Service--Revenue rulings and procedures, Customs decisions,

legal determinations, and other similar ruling documents. Major

legislative regulations are covered fully.

Environmental Protection Agency

Office of Pesticides and Toxic Substances--Actions regarding

pesticide tolerances, temporary tolerances, tolerance exemptions, and

food additives regulations, except those that make an existing

tolerance more stringent.

Office of Pesticides and Toxic Substances--Unconditional approvals

of TSCA section 5 test marketing exemptions, and of experimental use

permits under FIFRA.

Office of Pesticides and Toxic Substances--Decision documents

defining and establishing registration standards; decision documents

and termination decisions for the RPAR process; and data call-in

requests made under section 3(c)(2)(B) of FIFRA.

Office of Air, Noise, and Radiation--Rules that unconditionally

approve revisions to State Implementation Plans.

Office of Air, Noise, and Radiation--Unconditional approvals of

equivalent methods for ambient air quality monitoring and of NSPS,

NESHAPS, and PSD delegations to States; approvals of carbon monoxide

and nitrogen oxide waivers; area designations of air quality planning

purposes; and deletions from the NSPS source categories list.

Office of Water--Unconditional approvals of State Water Standards.

Office of Water--Unconditional approval of State underground

injection control programs, delegations of NPDES authority to States;

deletions from the 307(a) list of toxic pollutants; and suspension of

Toxic Testing Requirements under NPDES.

Office of Solid Water and Emergency Response--Unconditional

approvals of State authorization under RCRA of State solid waste

management plans and of hazardous waste delisting petitions under RCRA.

Pension Benefit Guaranty Corporation

Interest Rates--Changes in interest rates on later premium payments

and delinquent employer liability payments under sections 6601 and 6621

of the Internal Revenue Code as amended by the Tax Equity and Fiscal

Responsibility Act of 1982.

BILLING CODE 3110-01-P

Appendix A

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TN10MY94.003

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TN10MY94.005

TN10MY94.006

TN10MY94.007

TN10MY94.008

TN10MY94.009

TN10MY94.010

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TN10MY94.012

TN10MY94.013

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TN10MY94.020

[FR Doc. 94-11203 Filed 5-5-94; 4:10 pm]

BILLING CODE 3110-01-C

_______________________________________________________________________

Part VII

Department of Agriculture

_______________________________________________________________________

Cooperative State Research Service

_______________________________________________________________________

Small Business Innovation Research Grants Program; Notice

DEPARTMENT OF AGRICULTURE

Cooperative State Research Service

Small Business Innovation Research Grants Program for Fiscal Year

1995; Solicitation of Applications

Notice is hereby given that under the authority of the Small

Business Innovation Development Act of 1982 (Pub. L. 97-219), as

amended (15 U.S.C. 638) and section 630 of the Act making

appropriations for Agriculture, Rural Development, and Related Agencies

programs for fiscal year ending September 30, 1987, and for other

purposes, as made applicable by section 101(a) of Public Law Number 99-

591, 100 Stat. 3341, the U.S. Department of Agriculture (USDA) expects

to award project grants for certain areas of research to science-based

small business firms through Phase I of its Small Business Innovation

Research (SBIR) Grants Program. This program will be administered by

the Office of Grants and Program Systems, Cooperative State Research

Service. Firms with strong scientific research capabilities in the

topic areas listed below are encouraged to participate. Objectives of

the three-phase program include stimulating technological innovation in

the private sector, strengthening the role of small businesses in

meeting Federal research and development needs, increasing private

sector commercialization of innovations derived from USDA-supported

research and development efforts, and fostering and encouraging

participation of women-owned and socially and economically

disadvantaged small business concerns in technological innovation.

The total amount expected to be available for Phase I of the SBIR

Program in fiscal year 1995 is approximately $3,500,000. The

solicitation is being announced to allow adequate time for potential

recipients to prepare and submit applications by the closing date of

September 1, 1994. The research to be supported is in the following

topic areas:

1. Forests and Related Resources

2. Plant Production and Protection

3. Animal Production and Protection

4. Air, Water and Soils

5. Food Science and Nutrition

6. Rural and Community Development

7. Aquaculture

8. Industrial Applications

9. Marketing and Trade

The award of any grants under the provisions of this solicitation

is subject to the availability of appropriations.

This program is subject to the provisions found at 7 CFR part 3403,

as amended. These provisions set forth procedures to be followed when

submitting grant proposals, rules governing the evaluation of proposals

and the awarding of grants, and regulations relating to the post-award

administration of grant projects. In addition, USDA Uniform Federal

Assistance Regulations, as amended (7 CFR part 3015), Governmentwide

Debarment and Suspension (Non-procurement) and Governmentwide

Requirements for Drug-free Workplace (Grants) (7 CFR part 3017), New

Restrictions on Lobbying (7 CFR part 3018), and Managing Federal Credit

Programs (7 CFR part 3) apply to this program. Copies of 7 CFR part

3403, 7 CFR part 3015, 7 CFR part 3017, 7 CFR part 3018, and 7 CFR part

3 may be obtained by writing or calling the office indicated below.

The solicitation, which contains research topic descriptions and

detailed instructions on how to apply, may be obtained by writing or

calling the office indicated below. Please note that applicants who

submitted SBIR proposals for fiscal year 1994 or who have recently

requested placement on the list for fiscal year 1995 will automatically

receive a copy of the fiscal year 1995 solicitation.

Proposal Services Branch, Awards Management Division, Cooperative State

Research Service, U.S. Department of Agriculture, Ag Box 2245,

Washington, DC 20250-2245, telephone: (202) 401-5048.

Done at Washington, DC, this 4th day of May 1994.

William D. Carlson,

Associate Administrator, Cooperative State Research Service.

[FR Doc. 94-11166 Filed 5-9-94; 8:45 am]

BILLING CODE 3410-22-M