Federal agencies use rules and regulations to achieve important public outcomes, such as ensuring public health and safety, limiting environmental pollution, and overseeing financial markets and institutions. However, because regulations can have significant costs as well as benefits, agencies need to comply with certain requirements when developing and issuing them.
Federal agencies implement specific elements of laws through regulations, which typically require or prohibit certain actions. In general, the process to create these regulations (or rules) has three main phases:
(1) Initiating rulemaking actions,
(2) Developing proposed rules, and
(3) Developing final rules.
In practice, however, this process is often more complex, requiring regulatory analysis, internal discussions and reviews, and opportunities for public comments.
Over the last few decades, the Congress and the President have added requirements for procedures and analysis to enhance oversight of the federal rulemaking process, promote greater transparency and public participation, and reduce regulatory burdens on affected parties. However, there are numerous recommendations to further improve the transparency and effectiveness of the federal rulemaking process and related regulatory activities.
Transparency of the regulatory process benefits the public and aids congressional oversight. However, there have been persistent weaknesses in transparency that can be improved in the following ways:
- Identifying significant rules: The Office of Management and Budget (OMB) reviews rules that it or the publishing agency determines to be “significant” under criteria established by executive order. These rules also require additional interagency reviews and an assessment of the rule’s costs and benefits. However, for a majority of such rules, neither OMB nor the agency explain why a rule has been designated significant. OMB can work with federal agencies to clearly communicate the reasoning for this determination and also reevaluate its long-standing agreement with the Department of the Treasury to exempt some tax regulations from OMB and interagency reviews.
- Respond to public comments: Federal agencies are usually required to publish a proposed rule in the Federal Register and solicit public comments before finalizing regulations. However, there are exceptions to expedite rulemaking in certain circumstances, such as for an emergency or other “good cause.” Although agencies often request comments on major final rules (those with the largest economic impact) that were issued without a proposed rule, they do not always respond to the comments they receive—a missed opportunity to make changes to improve rules and respond to the public. OMB can issue guidance to encourage federal agencies to respond to comments on final major rules issued without a proposed rule.
- Better document OMB and interagency reviews: The way federal agencies document OMB and interagency reviews of their significant rules could be improved. For example, some agencies do not provide clear and complete documentation of the changes made during these reviews. There has also been uneven attribution of who initiated changes, and agencies have had differing interpretations about which changes required documentation. OMB can provide additional guidance to agencies to improve the transparency and documentation of the review process.
Promoting effective regulations, guidance, and user fees
Federal agencies can strengthen internal controls to ensure that they have consistent and effective processes for the development, review, dissemination, and evaluation of their regulations and related guidance and user fees.
- Regulatory user fees: User fees are assessed on certain nonfederal entities that are subject to regulation, and they represent a significant source of revenue for the federal government. To ensure the effectiveness of these fees, decision makers can consider certain key elements when setting, collecting, using, and evaluating them, such as whether to provide exemptions for small entities, the timing of fee collections, and outreach to stakeholders.
- Regulatory guidance: Federal agencies use guidance to clarify or interpret regulations in a timely manner. While selected agencies have standard practices for developing guidance, they could strengthen the use of internal controls (such as maintaining written procedures). Agencies can also make guidance easier for the public to access online, and ensure appropriate review and use of guidance documents.
- Reexamining existing regulations: Analyzing existing regulations can help federal agencies evaluate how well the regulations work in practice and determine whether they should be modified or repealed. Agencies often make changes to regulations in response to this retrospective analysis, but they can also improve progress reporting and strengthen the links between the analysis and their performance goals.
- Cooperation with foreign regulators: Multiple federal agencies increasingly regulate many products that originate overseas. Also, reducing existing (and avoiding future) regulatory differences between countries can enhance public health and safety, facilitate trade, and support the competitiveness of U.S. businesses. Following key practices, such as early and ongoing coordination and stakeholder involvement, facilitates international regulatory cooperation. Federal agencies also could benefit from sharing information on the implementation of these cooperative activities and the lessons they have learned.
GAO-16-720: Published: Sep 6, 2016. Publicly Released: Sep 6, 2016.
The Internal Revenue Service (IRS) uses a variety of documents to communicate its interpretation of tax laws to the public, but only considers Internal Revenue Bulletin (IRB) guidance to be authoritative. IRS information published outside of the IRB can help taxpayers understand tax laws and make informed decisions, but does not always include information clarifying the limitations of its use. IRS...
GAO-15-718: Published: Sep 16, 2015. Publicly Released: Sep 16, 2015.
GAO identified key elements of regulatory user fees for decision makers to consider as they design, implement, and evaluate these fees. Setting regulatory user fees: Congress determines in statute the degree of flexibility to make fee design and implementation decisions that will be retained or delegated to the agency. This has implications for whether agencies issue regulations to set fees, who...
GAO-15-368: Published: Apr 16, 2015. Publicly Released: May 18, 2015.
The four departments—Agriculture (USDA), Education (Education), Health and Human Services (HHS), and Labor (DOL)—and their selected components used guidance for multiple purposes, such as clarifying or interpreting regulations and providing grant administration information. The terminology used for agency guidance varied and agency components issued varying amounts of guidance, ranging from ab...
GAO-14-714: Published: Sep 11, 2014. Publicly Released: Sep 11, 2014.
How often and to what extent agencies included selected key elements of cost-benefit analysis varied by rule type. The selected key elements in GAO's review are a statement of purpose; monetized or quantified costs and benefits or a qualitative discussion of them; and a discussion of alternatives. The 203 rules GAO reviewed are categorized into three broad, nonmutually exclusive categories—major...
GAO-14-268: Published: Apr 11, 2014. Publicly Released: May 12, 2014.
Agencies often made changes to regulations in response to completed retrospective regulatory analyses, but could improve the reporting of progress. Executive Orders and related implementation guidance from the Office of Management and Budget (OMB) require executive agencies, and encourage independent regulatory agencies, to develop and implement retrospective review plans. Agencies use semiannual...
GAO-13-588: Published: Aug 1, 2013. Publicly Released: Aug 1, 2013.
All seven U.S. regulatory agencies that GAO contacted reported engaging in a range of international regulatory cooperation activities to fulfill their missions. These activities include the United States and its trading partners developing and using international standards, recognizing each other's regulations as equivalent, and sharing scientific data. U.S. agency officials GAO interviewed said t...
GAO-13-21: Published: Dec 20, 2012. Publicly Released: Jan 22, 2013.
Agencies did not publish a notice of proposed rulemaking (NPRM), enabling the public to comment on a proposed rule, for about 35 percent of major rules and about 44 percent of nonmajor rules published during 2003 through 2010. A major rule has significant economic impact and may, for example, have an annual effect on the economy of $100 million or more. Agencies published a total of 568 major rule...
GAO-09-205: Published: Apr 20, 2009. Publicly Released: May 8, 2009.
Regulation is one of the principal tools that the government uses to implement public policy. As part of the rulemaking process federal agencies must comply with an increasing number of procedural and analytical requirements. GAO was asked to examine how broadly applicable rulemaking requirements cumulatively have affected (1) agencies' rulemaking processes, in particular including effects of requ...