Federal Rulemaking

Congress and presidents have worked to enhance oversight of the federal rulemaking process to promote greater transparency and public participation, and to reduce regulatory burden. For example, recent administrations have directed agencies to identify rules that are obsolete or in need of revision. More recently, President Biden issued an Executive Order directing the Office of Management and Budget to recommend ways to improve and modernize the regulatory review process.  

The process for creating federal regulations generally has three main phases:

1. Initiating rulemaking actions
2. Developing proposed rules
3. Developing final rules

In practice, however, this process is often complex, requiring regulatory analysis, internal and interagency reviews, and opportunities for public comments. There are a number of ways to improve the transparency and effectiveness of this process.

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Improving transparency

Transparency of the regulatory process is important—it helps the public better understand the rulemaking process and aids in congressional oversight. Regulatory transparency can be improved in a number of ways, including:

• Identifying significant rules. The Office of Management and Budget (OMB) reviews rules considered “significant” under criteria established by executive order. Rules designated as significant 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 explains why a rule has been designated significant. OMB could work with federal agencies to clearly communicate the reasoning for this determination.  
• Responding 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 public comments on rules they’ve expedited, they do not always respond to these comments. Further, agencies often seek electronic comments on Regulations.gov, but do not always ensure the authenticity of the comments. OMB could issue additional guidance and agencies could take steps to improve rules and better respond to the public.
• Performing and documenting analyses and reviews. Federal agencies can improve how they perform and document OMB and interagency reviews of their significant rules, as well as their analysis of costs and benefits. For example, some agencies do not provide clear and complete documentation of some of the changes made during OMB and interagency reviews. In addition, agencies should ensure their cost-benefit analyses are consistent with best practices, including analytical transparency. Agencies also need to work with OMB to ensure that rules comply with the Congressional Review Act.

Promoting effective regulations

Federal agencies need to ensure that they have effective processes to develop, review, disseminate, and evaluate their regulations, related guidance, and user fees. Some issues to consider include:

• Regulatory user fees. User fees are assessed on certain entities that are subject to regulation, and they represent a significant source of federal revenue. Agencies should consider certain key elements when setting, collecting, using, and evaluating these fees, such as the timing of fee collections and outreach to stakeholders.  
• Regulatory guidance. Federal agencies publish guidance to help clarify or interpret regulations for the public. While some agencies have standard practices for developing guidance, they could strengthen the use of internal controls (such as maintaining written procedures). Agencies could also make guidance easier for the public to access online.  
• Existing regulations. Analyzing existing regulations can help federal agencies evaluate how well the regulations are working. Agencies often make changes to regulations in response to these analyses. However, they could also improve progress reporting and strengthen the links between these analyses and their performance goals. Agencies could also reduce the paperwork burden associated with federal regulations by reviewing their burden estimates and making necessary revisions.  
• Foreign regulatory cooperation. Federal agencies are increasingly regulating products that originate overseas. 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. Key practices, such as early and ongoing coordination and stakeholder involvement, can facilitate international regulatory cooperation.

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