July | August 2017


Following the Rules

by Andy Karellas
Did you read today’s issue of the Federal Register? Odds are that it’s not high on your reading list, but for federal policy, it’s an important resource to track the status of federal regulations and to better understand the potential impact for your state and district.
According to a 2015 report by the White House Office of Management and Budget, unfunded mandates and federal regulations cost states, cities and the general public between $57 billion and $85 billion each year. While state leaders are working to maintain a balanced budget in their respective states, they often can’t factor in the potential economic costs imposed by federal regulations.
The federal regulation—or rulemaking—process can be daunting and complicated for many state leaders. Who has the authority to write regulations? How can state leaders provide input? When does a rule go into effect? Who has oversight of regulations?
These are questions that have been raised throughout the course of our nation’s history. Over the years, Congress and presidents have taken steps to improve the process by enacting policies focused on transparency, mandatory reporting and increased oversight.
Spurred by the New Deal legislation in the 1930s, Congress passed the Federal Register Act in 1935 that established a uniform system for handling and communicating regulations issued by agencies to the public. This is the origin of the current Federal Register, which is published daily and available online.
One of the most significant policies enacted to shape the regulatory process was the Administrative Procedure Act of 1946, or the APA, which established the framework for the rulemaking process largely used today. It required agencies to publish a notice of the proposed rulemaking, also known as NPRM, to collect comments from the public and provide at least a 30-day waiting period before the rule can become effective.
For state and local governments, one of the most significant policies enacted was the Unfunded Mandates Reform Act of 1995, or UMRA. The law was designed to limit the imposition of unfunded federal mandates on state, local and tribal governments by requiring regulatory agencies to
assess the expenditures that may result from a proposed rule. In addition, UMRA requires federal agencies to provide specific analysis and increased consultations with states, local and tribal governments for rules estimated to cost more than $100 million per year, defined as major rules. It’s worth noting, however, that federal agencies regularly avoid those requirements and issue rules without providing a full impact analysis.
The Office of Information and Regulatory Affairs, or OIRA, within the White House Office of Management and Budget is the central authority responsible for reviewing and monitoring regulations issued by federal agencies to ensure they are in full compliance with the law.
“The Office of Information and Regulatory Affairs works with agencies to ensure that the regulations issued by the Obama administration protect the health and safety of the American people without imposing undue burdens,” said Administrator Howard Shelanski, who leads the office and is appointed by the president. “State and local governments are a key partner in implementing many rules and offer a unique voice in the regulatory process; we encourage agencies to bring this voice into the policy process as early as possible.”
Naturally, not all federal agencies process regulations in the same way—they each have unique personnel and statutory authority, which can further complicate the process.
Following is a general outline of the steps in the federal rulemaking process.

Navigating the Rulemaking Process

How Rules are Proposed
Federal agencies get their authority to issue regulations from laws enacted by Congress or delegated from an insisting presidential authority. Congress may pass laws that specifically direct an agency to solve a particular issue or accomplish an initiative.
To help the public understand when an agency plans to issue proposed rules, each agency is required to publish a regulatory plan, often referred to as the “Unified Agenda.” These plans are published on the Federal Register and the Federal Digital system, www.FDsys.gov.
There are occurrences when an agency may take preliminary steps and issue an “Advance Notice of Proposed Rulemaking” to receive more input from the public to shape the proposed rule and to analyze its potential impact. Agencies may convene outreach events with the public and provide opportunities to comment on the preliminary rules.
In addition, for rules that are assessed to cost more than $100 million, the agency is required to further analyze the impact on state, local and tribal governments, while also reviewing the potential affects to small businesses, as mandated by the Regulatory Flexibility Act.
Notice of Proposed Rule and Comment Period
The proposed rule, or Notice of Proposed Rulemaking—or NPRM—is the official document that outlines an agency’s proposed rule to address a particular problem or achieve a specific goal. The proposed rule is published in the Federal Register and online at www.regulations.gov and includes a summary, background, compliance statements and instructions on how to submit comments.
Federal agencies typically establish a comment period ranging from 30 to 180 days, depending on the scope of the proposed rule. It is not uncommon for federal agencies to extend the comment period, however, if they require more time to adequately assess the concerns from the public and members of Congress.
During the comment period, many agencies hold public hearings, roundtable meetings, conference calls, webinars and other outreach events to gather input. The federal agency then reviews the comments, which are public, to assess any changes. If there are major changes, the agency may publish a supplemental proposed rule to implement the changes. Federal agencies also may consult with other agencies that share oversight responsibilities for the issue.
Finally, before issuing a final rule, especially for major rules, OIRA will conduct a final review and assessment of the proposed rule to ensure they are in compliance with the required statutes.
Issuing the Final Rule and Oversight
Similar to the proposed rule, the final rule will include a full summary, explanation of the rule, regulatory goals and the date on which the rule goes into effect. Generally, rules go into effect no less than 30 days following publication in the Federal Register, and major rules are required to have a 60-day waiting period.
During the waiting period, agencies may provide further guidance to assist the public in complying with the new regulation. This is also the opportunity for compliance officials, Congress and the public to review the final rule. Congress has the authority to void a rule if they pass a resolution of disapproval and the president signs it, however, this has only happened once since 1996.