January 12, 2010

Regulation Checklist

Common Pitfalls in Regulations
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INTRODUCTION

Federal regulations are mandated by the executive branch of the federal government and are used to implement, in some cases to finely tune, laws from Congress. They reach most aspects of American life and touch every single individual in some way. The U.S. federal government creates an average of about 4,000 final regulations each year with about 500–700 reviewed by the White House (the Office of Information and Regulatory Affairs). Of those reviewed, between 45 and 75 have significant economic impacts. Most of the time, people that comment on regulations are those who feel directly impacted by those regulations, usually because they impose either a large cost on them or their company, lead to a loss of liberty, or because they address a problem that people feel deeply about.1 But for most Americans and, in fact, many regulated firms (literally all firms), regulations and how they work are a mystery and they have no idea how to comment effectively. It is important that people concerned with regulations know what to look for and how to comment effectively.

The process of regulating is governed by the 1946 Administrative Procedures Act (APA) which, as part of democratic government, requires agencies to solicit comments and respond to all significant comments.2 In general, comments on regulations may either be submitted electronically or in writing. Regulations are designed to interpret laws3 and may do so by further defining statutory terms, establishing a process to comply with the law, or establishing a standard. They have the force and effect of law and, in fact, many of the issues discussed in this paper might arise as a result of the original law. Agencies are bound by those laws and, if the issue is with the law itself, it may be more appropriate to appeal to Congress than to the agency.4

There is a concern by some that regulation controls a large part of our lives and yet is carried out by unelected bureaucrats.5 Although executive branch agencies are under the direct control of the president and can be monitored by Congress, it is true that they have a great deal of autonomy. This is particularly so as so many regulations require the work of experts to accomplish them. This makes it all the more important that citizens insist that their regulations be intelligible and easy to comment upon.

One of the most common ways that agencies create regulations is through "informal rulemaking." In this type of rulemaking, agencies will usually publish a proposed rule (Notice of Proposed Rulemaking or NPRM) in the Federal Register that contains both a "codified" part of the regulation (the actual rules that, when finalized, will appear in the Code of Federal Regulations) and a "preamble," which has a discussion of why and how the agency thinks the rules will accomplish the goal of the regulation. It will also solicit information and discuss the rules it proposes to codify.6 In addition, in proposed rules there will be a cost benefit analysis (Preliminary Regulatory Impact Analysis) of the rules(particularly for economically significant regulations), which is required by executive order (from the president), and an Initial Regulatory Flexibility Analysis (IRFA), which is an analysis of how the regulation will affect small businesses or other small entities.7

Before putting out a proposed rule, the agency may publish an Advanced Notice of Proposed Rulemaking (ANPRM) in the Federal Register, or it may meet with various constituencies to solicit comments on how the rule should be crafted. An ANPRM is generally published when the agency needs much more information before it chooses a course of action. For either an ANPRM or NPRM, once they have been published in the Federal Register, anyone may send the agency a written or electronic comment. A time limit for the acceptance of comments is specified in the proposal.8 To find these regulations and comment, there is a clearinghouse for regulations at the multi-agency Web site called Regulations.gov. Regulations.gov is a part of what has been termed "e-rulemaking" that lists rules, ways to comment and, eventually, will have a "docket" with all other comments on those rules. There are ways in which people can be notified about recently published regulations using Regulations.gov.9 The final rule is also published in the Federal Register, where the agency sets the date by which the regulated community must comply with the rule. The Federal Register is available online at http://www.gpoaccess.gov/fr/index.html. There is a good description of this process at Reginfo.gov.

ENDNOTES

1. A comment on a proposed federal rule, which is called a regulation when it is completed, is a written submission to the agency that is trying to put the rule forward that discusses any aspect of the proposed rule. It may be mailed to the agency or submitted as an email. At the end of each rule, the agency designates an individual with an address to which comments are directed.

2. In cases where there are many comments that are the same, the agency may respond to them as a group rather than address them individually.

3. Laws that direct regulatory agencies are passed by Congress and signed by the president. They tell the agency what they either can or must do in a regulation. Some are very specific and some are vague, leaving more discretion to the agency in the latter case.

4. People often will write or visit their congressional representatives to make their views known on a regulation.

5. It was felt that the reason Congress needed to delegate such broad powers to regulate virtually all portions of the economy was that there were so many complex areas that Congress simply did not have the time or expertise to handle them.

6. The APA “affords all interested persons an adequate opportunity to provide data, views, and arguments with respect to the agency's proposals and any alternative proposals of other interested persons.” To afford all interested persons an adequate opportunity to provide data, views, and arguments with respect to the agency's proposals and any alternative proposals of other interested persons.

7. Other analyses that may be contained in regulations include a Paperwork Reduction Act (PRA)analysis or analyses or rules affect regulations include complying with the Unfunded Mandates Reform Act, the National Technology Transfer and Reform Act, the Data Quality Act, the Congressional Review Act, the Government Performance Results Act, or Executive Orders on Federalism (13132), Civil Justice (1298), Family Considerations (12606)

8. The timeline is normally between 30 and 120 days. Agencies are often petitioned to extend the deadline for comments on large or complex rules.

9. For example, anyone may sign up for an “RSS feed” (Really Simple Syndication) which is a Web feed that may provide summaries as well as links to the documents. To use this, you must install one of the many RSS readers on your computer and then select from one of the many established RSS feeds on Regulations.gov. The RSS feeds currently on Regulations.gov list all of the agencies who might issue regulations.