Rulemaking:

OMB's Role in Reviews of Agencies' Draft Rules and the Transparency of Those Reviews

GAO-03-929: Published: Sep 22, 2003. Publicly Released: Sep 22, 2003.

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Under Executive Order 12866, the Office of Management and Budget's Office of Information and Regulatory Affairs (OIRA) reviews hundreds of agency rules each year before they are published in the Federal Register. Those reviews can have a significant effect on a broad array of public policies. GAO was asked to (1) describe OIRA's review process and any changes in its policies or processes in recent years, (2) provide detailed information about rules submitted by nine health, safety, or environmental agencies that were returned, withdrawn, or changed at OIRA's suggestion, and (3) describe how OIRA decided that certain existing rules merited high priority review.

The formal process by which OIRA reviews agencies' proposed and final rules is essentially unchanged since Executive Order 12866 was issued in 1993. However, there have been several changes in OIRA's policies in recent years, including increased use of public letters explaining why rules were returned to the agencies and prompting the development of new rules, increased emphasis on economic analysis, stricter adherence to the 90-day time limit for OIRA review, and improvements in the transparency of the OIRA review process (although some elements of that process are still unclear). Underlying many of these changes is a shift in how recent OIRA administrators view the office's role in the rulemaking process--from "counselor" to "gatekeeper." OIRA sometimes reviews drafts of rules before they are formally submitted, and OIRA has said it can have its greatest influence on agencies' rules during this informal review period. However, OIRA contends that agencies need only document the changes made to rules during what are sometimes very brief formal review periods. Because about 400 rules were changed, returned, or withdrawn during the 1-year period that GAO examined, the review focused on 85 rules from the nine health, safety, or environmental agencies with five or more such rules. OIRA significantly affected 25 of those 85 rules. The Environmental Protection Agency's rules were most often significantly changed, and almost all of the returned rules were from the Department of Transportation. OIRA's suggestions appeared to have at least some effect on almost all of the 25 rules' potential costs and benefits or the agencies' estimates of those costs and benefits. Outside parties contacted OIRA before or during its formal review regarding 11 of the 25 rules that OIRA significantly affected. In 7 of these 11 cases, at least some of OIRA's recommendations were similar to those of the outside parties, but we could not determine whether those contacts influenced OIRA's actions. The agencies' docket files did not always provide clear and complete documentation of the changes made during OIRA's review or at OIRA's suggestion, as required by the executive order. However, some agencies clearly documented these changes, sometimes including changes suggested during OIRA's informal reviews. OIRA did not publicly disclose how it determined that 23 of the 71 rules nominated by the public for change or elimination in 2001 merited high priority review. As explained to GAO, OIRA desk officers made the initial determinations regarding issues with which they were familiar, subject to the approval by OIRA management. The Mercatus Center at George Mason University made most of the nominations overall and in the high priority group. Regulatory agencies or OIRA have at least begun to address the issues raised in many of the 23 suggestions. OIRA's 2002 nomination and review process was different from the 2001 process in several respects (e.g., broader request for reforms, more responses from more commentors, prioritization of the suggestions being made by the agencies, and clearer discussion of process and criteria).

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: OMB disagreed with the recommendation and made no change to its transparency requirements. We followed up on this recommendation under one of the objectives addressed in GAO-09-205, and OIRA officials confirmed that the agency did not implement the recommendation. We are therefore closing this recommendation as not implemented.

    Recommendation: The Director of the Office of Management and Budget should improve the implementation of the transparency requirements in the executive order that are applicable to rulemaking agencies. Specifically, the Administrator should instruct agencies to put information about changes made in a rule after submission for OIRA's review and those made at OIRA's suggestion or recommendation in the agencies' public rulemaking dockets, and to do so within a reasonable period after the rules have been published.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  2. Status: Closed - Not Implemented

    Comments: OMB disagreed with the recommendation and made no change to its transparency requirements. We followed up on this recommendation under one of the objectives addressed in GAO-09-205, and OIRA officials confirmed that the agency did not implement the recommendation. We are therefore closing this recommendation as not implemented.

    Recommendation: The Director of the Office of Management and Budget should improve the implementation of the transparency requirements in the executive order that are applicable to rulemaking agencies. Specifically, the Administrator should define the types of "substantive" changes during the OIRA review process that agencies should disclose as including not only changes made to the regulatory text but also other, noneditorial changes that could ultimately affect the rules' application (e.g., explanations supporting the choice of one alternative over another and solicitations of comments on the estimated benefits and costs of regulatory options).

    Agency Affected: Executive Office of the President: Office of Management and Budget

  3. Status: Closed - Not Implemented

    Comments: OMB disagreed with the recommendation and made no change to its transparency requirements. We followed up on this recommendation under one of the objectives addressed in GAO-09-205, and OIRA officials confirmed that the agency did not implement the recommendation. We are therefore closing this recommendation as not implemented.

    Recommendation: The Director of the Office of Management and Budget should improve the implementation of the transparency requirements in the executive order that are applicable to OIRA. Specifically, the Administrator should establish procedures whereby either OIRA or the agencies disclose the reasons why rules are withdrawn from OIRA review.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  4. Status: Closed - Not Implemented

    Comments: OMB disagreed with the recommendation and made no change to its transparency requirements. We followed up on this recommendation under one of the objectives addressed in GAO-09-205, and OIRA officials confirmed that the agency did not implement the recommendation. We are therefore closing this recommendation as not implemented.

    Recommendation: The Director of the Office of Management and Budget should improve the implementation of the transparency requirements in the executive order that are applicable to OIRA. Specifically, OIRA should reexamine its current policy that only documents exchanged by OIRA branch chiefs and above need to be disclosed because most of the documents that are exchanged while rules are under review at OIRA are exchanged between agency staff and OIRA desk officers.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  5. Status: Closed - Implemented

    Comments: In his written comments on the draft report, the Administrator of OIRA said that OIRA planned to review its implementation of the transparency requirements and, in particular, would work to improve the clarity of its meeting log. The OMB website link providing information on meetings and outside communications now more clearly identifies which regulatory action was discussed at a meeting and the affiliation (including client represented, if applicable) of the participants in the meeting. On May 18, 2005, an OMB representative confirmed that OIRA agreed with this recommendation and took action to improve the transparency of its meeting logs in response to GAO's recommendation.

    Recommendation: The Director of the Office of Management and Budget should improve the implementation of the transparency requirements in the executive order that are applicable to OIRA. Specifically, the Administrator should more clearly indicate in the meeting log which regulatory action was being discussed and the affiliations of the participants in those meetings.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  6. Status: Closed - Not Implemented

    Comments: OMB disagreed with the recommendation and made no change to its transparency requirements. We followed up on this recommendation under one of the objectives addressed in GAO-09-205, and OIRA officials confirmed that the agency did not implement the recommendation. We are therefore closing this recommendation as not implemented.

    Recommendation: The Director of the Office of Management and Budget should change OIRA's database to clearly differentiate within the "consistent with change" outcome category which rules were substantively changed at OIRA's suggestion or recommendation and which were changed in other ways and for other reasons.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  7. Status: Closed - Not Implemented

    Comments: OMB disagreed with the recommendation and made no change to its transparency requirements. We followed up on this recommendation under one of the objectives addressed in GAO-09-205, and OIRA officials confirmed that the agency did not implement the recommendation. We are therefore closing this recommendation as not implemented.

    Recommendation: The Director of the Office of Management and Budget should define the transparency requirements applicable to the agencies and OIRA in section 6 of Executive Order 12866 in such a way that they include not only the formal review period, but also the informal review period when OIRA says it can have its most important impact on agencies' rules. Doing so would make the trigger for the transparency requirements applicable to OIRA's and the agencies' interaction consistent with the trigger for the transparency requirements applicable to OIRA regarding its communications with outside parties.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  8. Status: Closed - Not Implemented

    Comments: OMB disagreed with the recommendation and made no change to its transparency requirements. We followed up on this recommendation under one of the objectives addressed in GAO-09-205, and OIRA officials confirmed that the agency did not implement the recommendation. We are therefore closing this recommendation as not implemented.

    Recommendation: The Director of the Office of Management and Budget should improve the implementation of the transparency requirements in the executive order that are applicable to rulemaking agencies. Specifically, the Administrator should encourage agencies to use "best practice" methods of documentation that clearly describe those changes (e.g., like those used by FDA, EPA's Office of Water, or FMCSA).

    Agency Affected: Executive Office of the President: Office of Management and Budget

 

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