oversight

Federalism: Implementation of Executive Order 12612 in the Rulemaking Process

Published by the Government Accountability Office on 1999-05-05.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                       United States General Accounting Office

GAO                    Testimony
                       Before the Committee on Governmental Affairs
                       U.S. Senate



Not to be Released
Before 9:00 a.m. EDT
Wednesday
                       FEDERALISM
May 5, 1999


                       Implementation of
                       Executive Order 12612 in
                       the Rulemaking Process
                       Statement for the Record of L. Nye Stevens
                       Director, Federal Management and Workforce Issues
                       General Government Division




GAO/T-GGD-99-93
Statement

Federalism: Implementation of Executive
Order 12612 in the Rulemaking Process

              Mr. Chairman and Members of the Committee:

              I am pleased to provide some preliminary results from our ongoing review
              of the implementation of Executive Order 12612 on “Federalism,” which
              was issued by President Reagan in 1987. Although the executive order
                                                                                          1
              applies to all covered agencies’ policies that have federalism implications,
              you asked that we focus on agencies’ compliance with the order’s
              requirements in the rulemaking process in recent years. Specifically, we
              are examining (1) how often the preambles to covered agencies’ final rules
              issued between April 1, 1996, and December 31, 1998, mentioned
              Executive Order 12612 and how often they indicated that the agencies had
              conducted federalism assessments under the order; (2) what selected
              agencies have done to implement the requirements of Executive Order
              12612; and (3) what the Office of Management and Budget (OMB) has done
              to oversee federal agencies’ implementation of Executive Order 12612 in
              the rulemaking process.

              In brief, our preliminary results indicate that federal agencies covered by
              Executive Order 12612 mentioned the order in about 27 percent of the
              more than 11,000 final rules they issued between April 1996 and December
              1998. The agencies indicated, however, that they had prepared federalism
              assessments for only five of these rules. Of the 117 major rules issued by
              these agencies during this period, the preambles indicated that only 1 had
              a federalism assessment. State and local representatives that we consulted
              said that certain federal agencies should have done assessments for more
              of these major rules; however, the agencies said that their rules did not
              have sufficient federalism implications to trigger the executive order’s
              requirements. All three of the agencies we visited had some kind of
              written guidance on the executive order and had designated an official or
                                                                   2
              office responsible for ensuring its implementation. However, the methods
              the agencies use to determine whether federalism assessments are needed
              varied among the agencies. OMB officials told us that they have taken no
              specific actions to implement the executive order, but said the order is
              considered along with other requirements as part of their regulatory
              review process under Executive Order 12866.



              1
               It is unclear whether Executive Order 12612 covers regulations and other policies issued by
              independent regulatory agencies, such as the Federal Communications Commission and the Securities
              and Exchange Commission. Therefore, we are focusing our review on executive departments and
              agencies that are not independent regulatory agencies.
              2
               As discussed later in this statement, the agencies we visited were those with the most major rules that
              state and local government representatives believed should have had a federalism assessment.




              Page 1                                                                             GAO/T-GGD-99-93
             Statement
             Federalism: Implementation of Executive Order 12612 in the Rulemaking Process




             Before discussing our preliminary findings in detail, it will be helpful to
Background   review the key features of Executive Order 12612 and some recent
             initiatives related to federalism. The executive order establishes a set of
             fundamental principles and criteria that executive departments and
             agencies should use when formulating and implementing policies that have
             federalism implications. For example, the executive order says that
             federal agencies should refrain to the maximum extent possible from
             establishing uniform, national standards for programs with federalism
             implications and that, when national standards are required, they should
             consult with appropriate officials and organizations representing the states
             in developing those standards. The order says that regulations and other
             policies have federalism implications if they “have substantial direct
             effects on the States, on the relationship between the national government
             and the States, or on the distribution of power and responsibilities among
             the various levels of government.”

             Executive Order 12612 also contains specific requirements for agency
             implementation and governmentwide coordination and review. For
             example, the head of each executive department and agency is required to
             designate an official to be responsible for ensuring the implementation of
             the order, and for determining which proposed policies have sufficient
             federalism implications to warrant preparation of a federalism assessment.
             If an assessment is prepared, it must accompany any proposed or final rule
                                                                           3
             submitted to OMB for review under Executive Order 12866. OMB, in turn,
             is required to ensure that agencies’ rulemaking actions are consistent with
             the policies, criteria, and requirements in the federalism executive order.

             Although Executive Order 12612 has remained in effect since it was issued
             in 1987, there have been several other initiatives that were, at least in part,
             intended to improve the relationship between federal rulemaking agencies
             and state and local governments. For example, in 1993 President Clinton
             issued Executive Order 12875 on “Enhancing the Intergovernmental
             Partnership,” which requires that agencies develop effective processes to
             permit state and local officials to provide meaningful and timely input in
             the development of regulatory proposals containing significant unfunded
             mandates. In 1995, Congress enacted the Unfunded Mandates Reform Act
             (UMRA), part of which requires agencies to take a number of analytical

             3
              Executive Order 12612 actually refers to rulemaking procedures under Executive Order 12291, which
             was revoked and replaced by Executive Order 12866 in 1993. Because only “significant” rules are
             submitted to OMB for review under Executive Order 12866, federalism assessments for nonsignificant
             rules are not required to be submitted to OMB. For a description of the review process under this
             order, see Regulatory Reform: Implementation of the Regulatory Review Executive Order (GAO/T-96-
             185, Sept. 25, 1996).




             Page 2                                                                         GAO/T-GGD-99-93
                        Statement
                        Federalism: Implementation of Executive Order 12612 in the Rulemaking Process




                        and procedural steps during the rulemaking process for certain rules that
                        involve a mandate.

                        On May 14, 1998, President Clinton issued Executive Order 13083 on
                        “Federalism,” which was intended to replace both Executive Order 12612
                        and Executive Order 12875. The new executive order was to take effect in
                        mid-August 1998, and would have made a number of changes to the
                        specific requirements in Executive Order 12612. For example, agencies
                        would no longer have been required to designate an official to ensure
                        implementation of federalism requirements, and would not have been
                        required to prepare federalism assessments for regulations and other
                        policies with federalism implications. However, the President suspended
                        Executive Order 13083 before it became effective in response to concerns
                        raised by the National Governors’ Association and other interested
                                4
                        parties. Many of the commentators objected to the new order because
                        they believed it expanded the federal government’s authority to make
                        national policies and standards. There was also criticism that the new
                        order was issued without consulting affected state and local government
                        representatives. With the suspension of Executive Order 13083, Executive
                        Order 12612 remains the primary presidential directive to federal agencies
                        on how they are to develop and implement regulations that have
                        federalism implications.

                        Executive Order 12612 does not require agencies to mention the order in
Few Rules Address       the preamble to their final rules or to note in those preambles whether a
Executive Order 12612   federalism assessment was prepared. Therefore, our review of the rule
Requirements            preambles does not show whether agencies considered the executive
                        order or whether the agencies prepared federalism assessments. However,
                        mentioning the executive order in the preamble to a final rule is a clear
                        indication that the agency was aware of and considered its requirements in
                        some way. Also, if an agency prepared a federalism assessment for a final
                        rule, the agency is likely to describe the assessment in the preamble to the
                        rule.

                        To determine how often agencies have mentioned Executive Order 12612
                        and federalism assessments in the preambles to their rules, we examined
                        all final rules issued by the covered agencies between April 1996 and
                        December 1998, and all rules issued during this period that were
                        considered “major” rules under the congressional review requirements in
                        the Small Business Regulatory Enforcement and Fairness Act (SBREFA).
                        We selected this time period because it allowed us to use our existing
                        4
                            Executive Order 13083 was suspended by Executive Order 13095 on August 5, 1998.




                        Page 3                                                                           GAO/T-GGD-99-93
                             Statement
                             Federalism: Implementation of Executive Order 12612 in the Rulemaking Process




                             database of major rules issued since the passage of the SBREFA. SBREFA
                             defines a rule as “major” if the Administrator of OMB’s Office of
                             Information and Regulatory Affairs concludes that the rule is likely to
                             result in (1) an annual effect on the economy of $100 million or more; (2)
                             an increase in costs or prices; or (3) significant adverse effects on (among
                             other things) competition, employment, investment, or productivity.

Rule Preambles Frequently    To summarize the 3 years of data depicted in figure 1, nonindependent
                             regulatory agencies published 11,414 final rules in the Federal Register
Did Not Mention the Order,   between April 1996 and December 1998. The agencies indicated in the
and Reported Few             preambles that they had conducted federalism assessments for 5 of these
Federalism Assessments       11,414 rules—2 in 1996 and 3 in 1997. In 3,016 rules (26 percent of the
                             total), the agencies stated that no federalism assessment was conducted
                             because the rules did not have federalism implications. Nearly all of these
                             statements were standard, “boilerplate” certifications with little or no
                             discussion of why the rule did not trigger the executive order’s
                             requirements. In the remaining 8,393 rules (74 percent), the agencies did
                             not mention Executive Order 12612.




                             Page 4                                                               GAO/T-GGD-99-93
                                         Statement
                                         Federalism: Implementation of Executive Order 12612 in the Rulemaking Process




Figure 1: Agencies Indicated Only Five
Final Rules Issued Between April 1996
and December 1998 Had Federalism
Assessments




                                         Note: The data for 1996 covers only those rules issued from April 1 to December 31.
                                         Source: Federal Register and GAO analysis.




                                         Five departments and agencies issued nearly 80 percent of all applicable
                                         final rules during this period—the Departments of Transportation (DOT),
                                         Agriculture (USDA), Commerce (DOC), and Health and Human Services
                                         (HHS), and the Environmental Protection Agency (EPA). As figure 2
                                         shows, these agencies differed substantially in the extent to which they
                                         mentioned Executive Order 12612 in the preambles to their final rules. For
                                         example, DOT mentioned the executive order in nearly 60 percent of its
                                         final rules, whereas EPA did not mention the order in any of the 1,914 final
                                         rules it issued between April 1996 and December 1998.




                                         Page 5                                                                         GAO/T-GGD-99-93
                                           Statement
                                           Federalism: Implementation of Executive Order 12612 in the Rulemaking Process




Figure 2: Agencies Differed In Degree to
Which They Mentioned Executive Order
12612 in Final Rules Issued Between
April 1996 and December 1998




                                           Source: Federal Register and GAO analysis.




                                           Subsection 6(c) of Executive Order 12612 says that a federalism
                                           assessment should (1) contain the designated official’s certification that
                                           the regulation or other policy has been assessed in light of the principles,
                                           criteria, and requirements in sections 2 through 5 of the order; (2) identify
                                           any provision or element of the policy that is inconsistent with those
                                           principles, criteria, and requirements; (3) identify the extent to which the
                                           policy imposes additional costs or burdens on the states; and (4) identify
                                           the extent to which the policy would affect the states’ ability to discharge
                                           traditional state governmental functions or other aspects of state
                                           sovereignty. Of the five rules in which the preambles indicated that a
                                           federalism assessment had been prepared, all five contained either these
                                           four requirements or a statement indicating that the federalism assessment
                                           (located elsewhere in the rulemaking docket) addressed these four


                                           Page 6                                                               GAO/T-GGD-99-93
                                           Statement
                                           Federalism: Implementation of Executive Order 12612 in the Rulemaking Process




                                           requirements. As table 1 shows, the five rules for which federalism
                                           assessments were prepared were issued by four agencies (DOC, DOT,
                                           HHS, and the Department of Labor) in either 1996 or 1997.



Table 1: Four Agencies Issued Five Final
Rules With Federalism Assessments                                            Date final rule
Between April 1996 and December 1998       Department or agency              was published Title
                                           Department of Health and                          Regulations Restricting the Sale and
                                           Human Services                                    Distribution of Cigarettes and Smokeless
                                                                                             Tobacco to Protect Children and
                                                                             Aug. 28, 1996 Adolescents
                                           Department of
                                           Transportation                    Dec. 16, 1996      Roadway Worker Protection
                                           Department of Commerce            Jan. 30, 1997      Florida Keys National Marine Sanctuary
                                                                                                Hawaiian Islands Humpback Whale
                                                                             Mar. 28, 1997      National Marine Sanctuary
                                           Department of Labor               Mar. 31, 1997      (Hazard) Abatement Verification
                                           Source: Federal Register and GAO analysis.




Only One Federalism                        Many of the final rules that federal agencies issue are administrative or
                                           routine in nature, and are therefore unlikely to have significant federalism
Assessment Reported for                    implications. As a result, it is not particularly surprising that agencies
Major Rules                                would not prepare federalism assessments for many of those rules.
                                           However, rules that are “major” under SBREFA (e.g., those that have a
                                           $100 million impact on the economy) and that involve or affect state and
                                           local governments are more likely to have federalism implications that
                                           would warrant preparation of an assessment.

                                           Of the 11,414 final rules that nonindependent agencies issued between
                                           April 1996 and December 1998, 117 of them were identified as “major”
                                           rules by the agencies and OMB. The agencies issuing the rules indicated in
                                                                                                                 5
                                           the Unified Agenda of Federal Regulatory and Deregulatory Actions that
                                           37 of them would affect state and local governments. The agencies
                                           indicated in the preambles to 21 of the rules that the rules would take
                                           precedence in the event they conflicted with state or local laws or
                                           regulations.

                                           As figure 3 shows, federal agencies covered by Executive Order 12612
                                           mentioned the executive order in the preambles to 30 of the 117 major

                                           5
                                            The Unified Agenda is issued twice each year by the Regulatory Information Service Center, and is a
                                           compendium of executive and independent agencies’ regulatory activities that are being developed,
                                           planned for the future, or completed.




                                           Page 7                                                                            GAO/T-GGD-99-93
                                       Statement
                                       Federalism: Implementation of Executive Order 12612 in the Rulemaking Process




                                       rules they issued between April 1996 and December 1998 (about 25 percent
                                       of the total). However, only one of these preambles indicated that a
                                       federalism assessment had been prepared for the rule—an HHS rule issued
                                       in 1996 restricting the sale and distribution of cigarettes and smokeless
                                       tobacco to protect children and adolescents. The other 29 rule preambles
                                       that mentioned the executive order stated that the rules did not have
                                       sufficient federalism implications to warrant the preparation of a
                                       federalism assessment. Most of these statements were “boilerplate”
                                       certifications with little or no explanation of why the executive order’s
                                       requirements were not applicable to the rules.

Figure 3: Only One Major Rule Issued
Between April 1996 and December 1998
Had a Federalism Assessment




                                       Sources: Federal Register and GAO’s major rule database.




                                       Four agencies issued 87 (75 percent) of the 116 major rules issued during
                                       this period without federalism assessments—HHS (30 rules), EPA (21
                                       rules), USDA (18 rules), and the Department of the Interior (18 rules). To
                                       determine how affected parties viewed the agencies’ decisions, we asked



                                       Page 8                                                               GAO/T-GGD-99-93
                          Statement
                          Federalism: Implementation of Executive Order 12612 in the Rulemaking Process




                          representatives from seven major state and local government interest
                          groups (known as the “Big Seven”) to review descriptions of the 116 rules
                          without federalism assessments and to indicate whether they believed any
                          of the rules should have had an assessment. Four of these organizations
                                                                                     6
                          provided us with comments on at least some of the rules. At least one of
                          the four organizations indicated that 79 of the 116 rules should have had a
                          federalism assessment. The agencies with the largest number of rules that
                          the four organizations considered in need of assessments were HHS (26
                          rules), USDA (18 rules), and EPA (10 rules). Two or more of the
                          organizations indicated that 30 of the rules should have had an assessment.

                          We then contacted officials in each of these three agencies to determine
                          whether federalism assessments had been prepared for these rules (but
                          not mentioned in the preambles to the rules) or why they believed that no
                          assessment was needed. The agencies did not indicate that any other
                          assessments had been prepared, and generally said that their rules did not
                          have sufficient federalism implications to trigger the executive order’s
                          requirements. In some cases, the agencies indicated that they had
                          substantively complied with the executive order by taking other actions to
                          address intergovernmental concerns during the rulemaking process.

                          Federal departments and agencies are primarily responsible for
Selected Agencies         implementing Executive Order 12612. Section 6 of the executive order
Have Taken Some           delineates the agencies’ responsibilities, requiring them to (1) designate an
Actions to Implement      official to be responsible for ensuring implementation of the order, (2)
                          have the designated official determine which proposed regulations have
Executive Order 12612     sufficient federalism implications to warrant the preparation of a
                          federalism assessment, and (3) send each federalism assessment to OMB
                          as a part of the regulatory review package sent pursuant to Executive
                          Order 12866. However, Executive Order 12612 provides the agencies with
                          broad discretion to determine how to meet these requirements.

Agencies Have Written     Each of the three agencies we visited—EPA, HHS, and USDA—has some
                          kind of written guidance on how to implement Executive Order 12612. All
Guidance and Designated   three of the agencies’ guidance documents identify a designated official or
Officials or Offices      office responsible for ensuring compliance with the executive order.



                          6
                           The National Conference of State Legislatures, the Council of State Governments, and the National
                          Association of Counties reviewed all of the rules. The National League of Cities reviewed all of the
                          rules except the EPA rules. The National Governors’ Association, the International City/County
                          Management Association, and the U.S. Conference of Mayors did not provide any assessments of the
                          rules.




                          Page 9                                                                            GAO/T-GGD-99-93
                               Statement
                               Federalism: Implementation of Executive Order 12612 in the Rulemaking Process




                               EPA issued its “Guidelines for Implementing Executive Order 12612:
                               Federalism” in June 1988. The guidelines identified the Assistant
                               Administrator of the Office of Policy, Planning, and Evaluation as the
                               designated EPA official for federalism. However, in 1992, the EPA
                               Administrator made the agency’s General Counsel responsible for carrying
                               out the functions of the designated official. The General Counsel was
                               authorized to delegate the authority to the Deputy General Counsel, who
                               could redelegate it to the Associate General Counsel level. EPA officials
                               said that all agency regulations are to be reviewed by the General Counsel
                               before being submitted to OMB and published in the Federal Register.

                               USDA’s guidance on “Regulatory Decisionmaking Requirements” was last
                               updated in March 1997, and the requirements that are related to Executive
                               Order 12612 are part of that overall guidance. The guidance indicates that
                               the department’s Office of the General Counsel (OGC) is responsible for
                               carrying out the responsibilities of the designated official. For example, it
                               says that OGC will “[r]eview regulations and notices of proposed
                               rulemaking for compliance with Executive Order 12612…and determine
                               whether the preparation of a federalism assessment by an agency is
                               required.” All USDA regulations are to be reviewed centrally by the
                               department’s OGC before being submitted to OMB and published in the
                               Federal Register.

                               In March 1988, HHS’s Assistant Secretary for Planning and Evaluation
                               (ASPE) issued a memo on “Compliance with Executive Orders on The
                               Family and Federalism.” The memo indicated that the Secretary had
                               assigned the ASPE lead responsibility for guidance, compliance, and
                               technical assistance related to the executive order. HHS officials said that,
                               with the exception of certain delegated regulations issued by the Food and
                               Drug Administration (FDA), the ASPE is responsible for reviewing and
                               clearing all departmental regulations. One facet of the ASPE’s review is to
                               determine whether the rules comply with Executive Order 12612. Many
                               nonmajor FDA regulations (as determined by FDA) are issued directly by
                               the Commissioner without formal departmental review and clearance. For
                               these regulations, HHS officials said that the FDA Commissioner exercises
                               the responsibilities of the designated official under the executive order.

Criteria for Determining the   Section 6 of Executive Order 12612 says that the designated official “shall
                               determine which proposed policies have sufficient federalism implications
Need for Federalism            to warrant the preparation of a Federalism Assessment.” Two of the three
Assessments Vary Across        agencies we visited established explicit criteria in their written guidance
the Three Agencies             on Executive Order 12612 to determine whether a rule has significant




                               Page 10                                                              GAO/T-GGD-99-93
  Statement
  Federalism: Implementation of Executive Order 12612 in the Rulemaking Process




  federalism implications. At least one of the agencies’ criteria seems to
  establish a high threshold for preparing an assessment.

  USDA’s written guidance on Executive Order 12612 does not establish any
  specific criteria that the department’s OGC should use to determine
  whether a particular rule or other policy has sufficient federalism
  implications to warrant the preparation of a federalism assessment.
  Neither has USDA’s OGC established any written criteria to guide these
  determinations. USDA officials said that OGC attorneys make their own
  determinations regarding federalism implications in the context of each
  rulemaking action.

  The HHS guidance on the executive order lists “threshold criteria” that can
  be used to determine whether a rule’s federalism effects are significant and
  thus require a federalism assessment. The guidance indicates that a rule
  should be considered to have significant federalism implications if it (1)
  has a direct causal effect on the states; (2) primarily relates to the
  structure and role of states (e.g., not just a reduction in funding of grant
  programs); (3) has effects within a reasonably foreseeable time frame (e.g.,
  within the next 5 years); and (4) has a significant incremental effect (e.g.,
  requiring states to do something that they are not already doing). The
  guidance also says that an assessment must be prepared if an action will
  directly create significant effects on states even if the action is mandated
  by law or the department otherwise has no discretion. Finally, it says that
  rules and other policies with either a positive or negative significant effect
  on the states require a federalism assessment.

  The criteria in EPA’s guidance are similar to, but also somewhat different
  from, the HHS criteria. For example, the guidance document says that,
  even if an action might have substantial federalism effects, it will not
  require a federalism assessment if a statute mandates the action or the
  means to carry it out are implied by statute. The EPA guidance also
  establishes the following four criteria, all of which must be met for the
  agency to determine that a rule has “substantial federalism effects” and
  therefore requires a federalism assessment:

• The rule must have an institutional effect on the states, not just a financial
  effect. The guidance says that the fact “[t]hat an action has a financial
  effect on States, regardless of magnitude, is not sufficient in itself to
  trigger a federalism assessment.” It also says a rule must “affect the roles
  and responsibilities of state government to have federalism implications.”
• The rule must “change significantly the relative roles of Federal and State
  governments in a particular program context, lead to Federal control over



  Page 11                                                              GAO/T-GGD-99-93
                          Statement
                          Federalism: Implementation of Executive Order 12612 in the Rulemaking Process




                          traditional State responsibilities, or decrease the ability of States to make
                          policy decisions with respect to their own functions” in order to have a
                          “substantial” effect.
                        • The rule must affect all or most states, “not simply one state or a small
                          cluster of States.”
                        • The rule must have a “direct, causal effect” on the states. If a rule creates
                          federalism effects as a side effect, the guidance says the rule would not
                          trigger the requirement for a federalism assessment.


                          These criteria seem to establish a high threshold for what constitutes
                          “sufficient” federalism implications to require an assessment. For example,
                          the executive order defines “state” to “refer to the States of the United
                          States of America, individually or collectively.” (Emphasis added.) EPA’s
                          guidance, on the other hand, indicates that federalism assessment should
                          be prepared only if a regulation or other policy affects all or most states.
                          However, EPA’s actions appear to be allowable because the executive
                          order does not define what is meant by “sufficient” federalism
                          implications, leaving that determination up to the agencies.

                          Section 7 of Executive Order 12612 indicates that, in implementing
OMB Has Taken Little      Executive Order 12866, OMB should, to the extent permitted by law, “take
Specific Action to        action to ensure that the policies of Executive departments and agencies
Ensure                    are consistent with the principles, criteria, and requirements” of the
                          federalism executive order. As noted previously, the order requires
Implementation of         agencies to submit federalism assessments (if they were prepared) along
Executive Order 12612     with any rules being submitted to OMB for review.

                          OMB officials told us that reviews of agencies’ actions in the federalism
                          area have been part of the standard regulatory reviews conducted by OMB
                          staff pursuant to Executive Order 12866. They said that agencies have
                          rarely submitted separate federalism assessments to OMB but have
                          addressed federalism considerations, when appropriate, as a part of the
                          cost-benefit analysis and other analytical requirements. These officials
                          also noted that there were few federalism assessments filed with OMB
                          during the Reagan and Bush administrations.

                          According to agency officials, OMB does not now have, nor did it
                          previously have, a separate oversight program for examining agencies’
                          adherence to the federalism executive order. OMB has not issued any
                          guidance to the agencies on the implementation of Executive Order 12612.
                          OMB does not maintain a list of the designated agency officials who are
                          responsible for implementation within their agencies. In fact, the White



                          Page 12                                                              GAO/T-GGD-99-93
              Statement
              Federalism: Implementation of Executive Order 12612 in the Rulemaking Process




              House web site indicates that Executive Order 13083 (the suspended
                                                                                          7
              Clinton order), not 12612, is the applicable executive order on federalism.

              One OMB official told us that Executive Order 12612, Executive Order
              12866, Executive Order 12875, and UMRA all substantively address the
              same idea regarding federalism. They all require that, if a proposed rule is
              likely to have a significant impact on other levels of government, the
              impact should be considered in analyzing the costs and benefits of the rule
              and the agency should consult with appropriate officials at the state and
              local level.

              Executive Order 12612 gives agencies substantial discretion to determine
Conclusions   which regulations and other policies have “sufficient” federalism
              implications to warrant preparation of a federalism assessment. Using that
              discretion, the agencies have prepared federalism assessments for very
              few rules. One of the agencies we visited had no written criteria to make
              those determinations. Although the other two agencies had written
              criteria, they had prepared only one federalism assessment and had
              mentioned the executive order in only 10 out of nearly 3,000 rules. The
              two agencies’ criteria were also inconsistent regarding whether statutorily
              mandated regulations required a federalism assessment. Also, other than
              including federalism as part of its regulatory reviews, OMB has taken no
              other specific actions to carry out its responsibility to ensure that agencies’
              regulations and other policies are consistent with the executive order.

              The fact that agencies have prepared federalism assessments for only 5 of
              the more than 11,000 final rules issued in recent years suggests that the
              agencies are not implementing the order as vigorously as they could. We
              will be exploring the implications of this situation as we complete the
              work on this issue that you have requested of us.




              7
              The OMB web site does not list executive orders. The White House web site lists only the executive
              orders issued during the Clinton Administration. It also contains the executive order that suspended
              Executive Order 13083, but to find it one must enter either the number of the order or the date on
              which it was issued.




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