PROVIDING FOR CONSIDERATION OF H.R. 3136, CONTRACT WITH AMERICA ADVANCEMENT ACT OF 1996
(Extensions of Remarks - April 19, 1996)

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[Extensions of Remarks]
[Pages E571-E579]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E571]]



    PROVIDING FOR CONSIDERATION OF H.R. 3136, CONTRACT WITH AMERICA 
                        ADVANCEMENT ACT OF 1996

                                 ______


                               speech of

                           HON. HENRY J. HYDE

                              of illinois

                    in the house of representatives

                        Thursday, March 28, 1996

  Mr. HYDE. Mr. Speaker, I submit for the Record a summary of the Small 
Business Regulatory Enforcement Fairness Act, included in H.R. 3136.

 Small Business Regulatory Enforcement Fairness Act Views of the House 
 Committees of Jurisdiction on the Congressional Intent Regarding the 
     ``Small Business Regulatory Enforcement Fairness Act of 1996''


                     I. SUMMARY OF THE LEGISLATION

       The Hyde amendment to H.R. 3136 replaced Title III of the 
     Contract with America Advancement Act of 1996 to incorporate 
     a revised version of the Small Business Regulatory 
     Enforcement Fairness Act of 1996 (the ``Act'). As enacted, 
     Title III of H.R. 3136 became Title II of Public Law 104-121. 
     This legislation was originally passed by the Senate as S. 
     942. The Hyde amendment makes a number of changes to the 
     Senate bill to better implement certain recommendations of 
     the 1995 White House Conference on Small Business regarding 
     the development and enforcement of Federal regulations, 
     including judicial review of agency actions under the 
     Regulatory Flexibility Act (RFA). The amendment also provides 
     for expedited procedures for Congress to review agency rules 
     and to enact Resolutions of Disapproval voiding agency rules.
       The goal of the legislation is to foster a more 
     cooperative, less threatening regulatory environment among 
     agencies, small businesses and other small entities. The 
     legislation provides a framework to make federal regulators 
     more accountable for their enforcement actions by providing 
     small entities with an opportunity for redress of arbitrary 
     enforcement actions. The centerpiece of the legislation is 
     the RFA which requires a regulatory flexibility analysis of 
     all rules that have a ``significant economic impact on a 
     substantial number'' of small entities. Under the RFA, this 
     term ``small entities'' includes small businesses, small non-
     profit organizations, and small governmental units.


                    II. SECTION-BY-SECTION ANALYSIS

     Section 201
       This section entitles the Act the ``Small Business 
     Regulatory Enforcement Fairness Act of 1996.'
     Section 202
       This section of the Act sets forth findings as to the need 
     for a strong small business sector, the disproportionate 
     impact of regulations on small businesses, the 
     recommendations of the 1995 White House Conference on Small 
     Business, and the need for judicial review of the Regulatory 
     Flexibility Act.
     Section 203
       This section of the Act sets forth the purposes of this 
     legislation. These include the need to address some of the 
     key Federal regulatory recommendations of the 1995 White 
     House Conference on Small Business. The White House 
     Conference produced a consensus that small businesses should 
     be included earlier and more effectively in the regulatory 
     process. The Act seeks to create a more cooperative and less 
     threatening regulatory environment to help small businesses 
     in their compliance efforts. The Act also provides small 
     businesses with legal redress from arbitrary enforcement 
     actions by making Federal regulators accountable for their 
     actions. Additionally, the Act provides for judicial review 
     of the RFA.

            Subtitle A--Regulatory Compliance Simplification

       Agencies would be required to publish easily understood 
     guides to assist small businesses in complying with 
     regulations and provide them informal, non-binding advice 
     about regulatory compliance. This subtitle creates permissive 
     authority for Small Business Development Centers to offer 
     regulatory compliance information to small businesses and to 
     establish resource centers to disseminate reference 
     materials. Federal agencies are directed to cooperate with 
     states to create guides that fully integrate Federal and 
     state regulatory requirements on small businesses.
     Section 211
       This section defines certain terms as used in this 
     subtitle. The term ``small entity'' is currently defined in 
     the RFA (5 U.S.C. 601) to include small business concerns, as 
     defined by section 3(a) of the Small Business Act (15 U.S.C. 
     632(a)) small nonprofit organizations and small governmental 
     jurisdictions. The process of determining whether a given 
     business qualifies as a small business is straightforward, 
     using size standard thresholds established by the SBA based 
     on Standard Industrial Classification codes. The RFA also 
     defines small organization and small governmental 
     jurisdiction (5 U.S.C. 601). Any definition established by an 
     agency for purposes of implementing the RFA would also apply 
     to this Act.
     Section 212
       This section requires agencies to publish ``small entity 
     compliance guides'' to assist small entities in complying 
     with regulations which are the subject of a final regulatory 
     flexibility analysis. The bill does not allow judicial review 
     of the guide itself. However, the agency's claim that the 
     guide provides ``plain English'' assistance would be a matter 
     of public record. In addition, the small business compliance 
     guide would be available as evidence of the reasonableness of 
     any proposed fine on the small entity.
       Agencies should endeavor to make these ``plain English'' 
     guides available to small entities through a coordinated 
     distribution system for regulatory compliance information 
     utilizing means such as the SBA's U.S. Business Advisor, the 
     Small Business Ombudsman at the Environmental Protection 
     Agency, state-run compliance assistance programs 
     established under section 507 of the Clean Air Act, 
     Manufacturing Technology Centers or Small Business 
     Development Centers established under the Small Business 
     Act.
     Section 213
       This section directs agencies that regulate small entities 
     to answer inquiries of small entities seeking information on 
     and advice about regulatory compliance. Some agencies already 
     have established successful programs to provide compliance 
     assistance and the amendment intends to encourage these 
     efforts. For example, the IRS, SEC and the Customs Service 
     have an established practice of issuing private letter 
     rulings applying the law to a particular set of facts. This 
     legislation does not require other agencies to establish 
     programs with the same level of formality as found in the 
     current practice of issuing private letter rulings. The use 
     of toll free telephone numbers and other informal means of 
     responding to small entities is encouraged. This legislation 
     does not mandate changes in current programs at the IRS, SEC 
     and Customs Service, but these agencies should consider 
     establishing less formal means of providing small entities 
     with informal guidance in accordance with this section.
       This section gives agencies discretion to establish 
     procedures and conditions under which they would provide 
     advice to small entities. There is no requirement that the 
     agency's advice to small entities be binding as to the legal 
     effects of the actions of other entities. Any guidance 
     provided by the agency applying statutory or regulatory 
     provisions to facts supplied by the small entity would be 
     available as relevant evidence of the reasonableness of any 
     subsequently proposed fine on the small entity.
     Section 214
       This section creates permissive authority for Small 
     Business Development Centers (SBDC) to provide information to 
     small businesses regarding compliance with regulatory 
     requirements. SBDCs would not become the predominant source 
     of regulatory information, but would supplement agency 
     efforts to make such information widely available. This 
     section is not intended to grant an exclusive franchise to 
     SBDC's for providing information on regulatory compliance.
       There are small business information and technical 
     assistance programs, both Federal and state, in various forms 
     throughout this country. Some of the manufacturing technology 
     centers and other similar extension programs administered by 
     the National Institute of Standards and Technology are 
     providing environmental compliance assistance in addition to 
     general technology assistance. The small business stationary 
     source technical and environmental compliance assistance 
     programs established under section 507 of the Clean Air Act 
     Amendments of 1990 is also providing compliance assistance to 
     small businesses. This section is designed to add to the 
     currently available resources for small businesses.
       Compliance assistance programs can save small businesses 
     money, improve their environmental performance and increase 
     their competitiveness. They can help small businesses learn 
     about cost-saving pollution prevention programs and new 
     environmental technologies. Most importantly, they can help 
     small business owners avoid potentially costly regulatory 
     citations and adjudications. Comments from small business 
     representatives in a variety of fora support the need for 
     expansion of technical information assistance programs.
     Section 215
       This section directs agencies to cooperate with states to 
     create guides that fully integrate Federal and state 
     requirements on

[[Page E572]]

     small entities. Separate guides may be created for each 
     state, or states may modify or supplement a guide to Federal 
     requirements. Since different types of small entities are 
     affected by different agency regulations, or are affected in 
     different ways, agencies should consider preparing separate 
     guides for the various sectors of the small business 
     community and other small entities subject to their 
     jurisdiction. Priority in producing these guides should be 
     given to areas of law where rules are complex and where the 
     regulated community tend to be small entities. Agencies may 
     contract with outside providers to produce these guides and, 
     to the extent practicable, agencies should utilize entities 
     with the greatest experience in developing similar guides.
     Section 216
       This section provides that the effective date for this 
     subtitle is 90 days after the date of enactment. The 
     requirement for agencies to publish compliance guides applies 
     to final rules published after the effective date. Agencies 
     have one year from the date of enactment to develop their 
     programs for informal small entity guidance, but these 
     programs should assist small entities with regulatory 
     questions regardless of the date of publication of the 
     regulation at issue.

               Subtitle B--Regulatory Enforcement Reforms

       This subtitle creates a Small Business and Agriculture 
     Regulatory Enforcement Ombudsman at the Small Business 
     Administration to give small businesses a confidential means 
     to comment on and rate the performance of agency enforcement 
     personnel. It also creates Regional Small Business Regulatory 
     Fairness Boards at the Small Business Administration to 
     coordinate with the Ombudsman and to provide small businesses 
     a greater opportunity to come together on a regional basis to 
     assess the enforcement activities of the various Federal 
     regulatory agencies.
       This subtitle directs all Federal agencies that regulate 
     small entities to develop policies or programs providing for 
     waivers or reductions of civil penalties for violations by 
     small entities, under appropriate circumstances.
     Section 221
       This section provides definitions for the terms as used in 
     the subtitle. [See discussion set forth under ``Section 211'' 
     above.]
     Section 222
       The Act creates a Small Business and Agriculture Regulatory 
     Enforcement Ombudsman at the SBA to give small businesses a 
     confidential means to comment on Federal regulatory agency 
     enforcement activities. This might include providing toll-
     free telephone numbers, computer access points, or mail-in 
     forms allowing businesses to comment on the enforcement 
     activities of inspectors, auditors and other enforcement 
     personnel. As used in this section of the bill, the term 
     ``audit'' is not intended to refer to audits conducted by 
     Inspectors General. This Ombudsman would not replace or 
     diminish any similar ombudsman programs in other agencies.
       Concerns have arisen in the Inspector General community 
     that this Ombudsman might have new enforcement powers that 
     would conflict with those currently held by the Inspectors 
     General. Nothing in the Act is intended to supersede or 
     conflict with the provisions of the Inspector General Act of 
     1978, as amended, or to otherwise restrict or interfere with 
     the activities of any Office of the Inspector General.
       The Ombudsman will compile the comments of small businesses 
     and provide an annual evaluation similar to a ``customer 
     satisfaction'' rating for different agencies, regions, or 
     offices. The goal of this rating system is to see whether 
     agencies and their personnel are in fact treating small 
     businesses more like customers than potential criminals. 
     Agencies will be provided an opportunity to comment on the 
     Ombudsman's draft report, as is currently the practice with 
     reports by the General Accounting Office. The final report 
     may include a section in which an agency can address any 
     concerns that the Ombudsman does not choose to address.
       The Act states that the Ombudsman shall ``work with each 
     agency with regulatory authority over small businesses to 
     ensure that small business concerns that receive or are 
     subject to an audit, on-site inspection, compliance 
     assistance effort, or other enforcement related communication 
     or contact by agency personnel are provided with a means to 
     comment on the enforcement activity conducted by such 
     personnel.'' The SBA shall publicize the existence of the 
     Ombudsman generally to the small business community and also 
     work cooperatively with enforcement agencies to make small 
     businesses aware of the program at the time of agency 
     enforcement activity. The Ombudsman shall report annually to 
     Congress based on substantiated comments received from small 
     business concerns and the Boards, evaluating the enforcement 
     activities of agency personnel including a rating of the 
     responsiveness to small business of the various regional and 
     program offices of each regulatory agency. The report to 
     Congress shall in part be based on the findings and 
     recommendation of the Boards as reported by the Ombudsman to 
     affected agencies. While this language allows for comment on 
     the enforcement activities of agency personnel in order to 
     identify potential abuses of the regulatory process, it 
     does not provide a mandate for the boards and the 
     Ombudsman to create a public performance rating of 
     individual agency employees.
       The goal of this section is to reduce the instances of 
     excessive and abusive enforcement actions. Those actions 
     clearly originate in the acts of individual enforcement 
     personnel. Sometimes the problem is with the policies of an 
     agency, and the goal of this section is also to change the 
     culture and policies of Federal regulatory agencies. At other 
     times, the problem is not agency policy, but individuals who 
     violate the agency's enforcement policy. To address this 
     issue, the legislation includes a provision to allow the 
     Ombudsman, where appropriate, to refer serious problems with 
     individuals to the agency's Inspector General for proper 
     action.
       The intent of the Act is to give small businesses a voice 
     in evaluating the overall performances of agencies and agency 
     offices in their dealings with the small business community. 
     The purpose of the Ombudsman's reports is not to rate 
     individual agency personnel, but to assess each program's or 
     agency's performance as a whole. The Ombudsman's report to 
     Congress should not single out individual agency employees by 
     name or assign an individual evaluation or rating that might 
     interfere with agency management and personnel policies.
       The Act also creates Regional Small Business Regulatory 
     Fairness Boards at the SBA to coordinate with the Ombudsman 
     and to provide small businesses a greater opportunity to 
     track and comment on agency enforcement policies and 
     practices. These boards provide an opportunity for 
     representatives of small businesses to come together on a 
     regional basis to assess the enforcement activities of the 
     various federal regulatory agencies. The boards may meet to 
     collect information about these activities, and report and 
     make recommendations to the Ombudsman about the impact of 
     agency enforcement policies or practices on small businesses. 
     The boards will consist of owners, operators or officers of 
     small entities who are appointed by the Administrator of the 
     Small Business Administration. Prior to appointing any board 
     members, the Administrator must consult with the leadership 
     of the House and Senate Small Business Committees. There is 
     nothing in the bill that would exempt the boards from the 
     Federal Advisory Committee Act, which would apply according 
     to its terms. The Boards may accept donations of services 
     such as the use of a regional SBA office for conducting their 
     meetings.
     Section 223
       The Act directs all federal agencies that regulate small 
     entities to develop policies or programs providing for 
     waivers or reductions of civil penalties for violations by 
     small entities in certain circumstances. This section builds 
     on the current Executive Order on small business enforcement 
     practices and is intended to allow agencies flexibility to 
     tailor their specific programs to their missions and 
     charters. Agencies should also consider the ability of a 
     small entity to pay in determining penalty assessments 
     under appropriate circumstances. Each agency would have 
     discretion to condition and limit the policy or program on 
     appropriate conditions. For purposes of illustration, 
     these could include requiring the small entity to act in 
     good faith, requiring that violations be discovered 
     through participation in agency supported compliance 
     assistance programs, or requiring that violations be 
     corrected within a reasonable time.
       An agency's policy or program could also provide for 
     suitable exclusions. Again, for purposes of illustration, 
     these could include circumstances where the small entity has 
     been subject to multiple enforcement actions, the violation 
     involves criminal conduct, or poses a grave threat to worker 
     safety, public health, safety or the environment.
       In establishing their programs, it is up to each agency to 
     develop the boundaries of their program and the specific 
     circumstances for providing for a waiver or reduction of 
     penalties; but once established, an agency must implement its 
     program in an evenhanded fashion. Agencies may distinguish 
     among types of small entities and among classes of civil 
     penalties. Some agencies have already established formal or 
     informal policies or programs that would meet the 
     requirements of this section. For example, the Environmental 
     Protection Agency has adopted a small business enforcement 
     policy that satisfies this section. While this legislation 
     sets out a general requirement to establish penalty waiver 
     and reduction programs, some agencies may be subject to other 
     statutory requirements or limitations applicable to the 
     agency or to a particular program. For example, this section 
     is not intended to override, amend or affect provisions of 
     the Occupational Safety and Health Act or the Mine Safety and 
     Health Act that may impose specific limitations on the 
     operation of penalty reduction or waiver programs.
     Section 224
       This section provides that this subtitle takes effect 90 
     days after the date of enactment.

           Subtitle C--Equal Access to Justice Act Amendments

       The Equal Access to Justice Act (EAJA) provides a means for 
     prevailing parties to recover their attorneys fees in a wide 
     variety of civil and administrative actions between eligible 
     parties and the government. This Act amends EAJA to create a 
     new avenue for parties to recover a portion of their 
     attorneys fees and costs where the government

[[Page E573]]

     makes excessive demands in enforcing compliance with a 
     statutory or regulatory requirement, either in an adversary 
     adjudication or judicial review of the agency's enforcement 
     action, or in a civil enforcement action. While this is a 
     significant change from current law, the legislation is not 
     intended to result in the awarding of attorneys fees as a 
     matter of course. Rather, the legislation is intended to 
     assist in changing the culture among government regulators to 
     increase the reasonableness and fairness of their enforcement 
     practices. Past agency practice too often has been to treat 
     small businesses like suspects. One goal of this bill is 
     to encourage government regulatory agencies to treat small 
     businesses as partners sharing in a common goal of 
     informed regulatory compliance. Government enforcement 
     attorneys often take the position that they must zealously 
     advocate for their client, in this case a regulatory 
     agency, to the maximum extent permitted by law, as if they 
     were representing an individual or other private party. 
     But in the new regulatory climate for small businesses 
     under this legislation, government attorneys with the 
     advantages and resources of the federal government behind 
     them in dealing with small entities must adjust their 
     actions accordingly and not routinely issue original 
     penalties or other demands at the high end of the scale 
     merely as a way of pressuring small entities to agree to 
     quick settlements.
     Sections 231 and 232
       H.R. 3136 will allow parties which do not prevail in a case 
     involving the government to nevertheless recover a portion of 
     their fees and cost in certain circumstances. The test for 
     recovering attorneys fees is whether the agency or government 
     demand that led to the administrative or civil action is 
     substantially in excess of the final outcome of the case and 
     is unreasonable when compared to the final outcome (whether a 
     fine, injunctive relief or damages) under the facts and 
     circumstances of the case.
       For purposes of this Act, the term ``party'' is amended to 
     include a ``small entity'' as that term is defined in section 
     601(6) of the Regulatory Flexibility Act (5 U.S.C. 601 et 
     seq.). This will ensure consistency of coverage between the 
     provisions of this subtitle and those of the Small Business 
     Act (15 U.S.C. 632 (a)). This broadening of the term 
     ``party'' is intended solely for purposes of the amendments 
     to the EAJA effected under this subtitle. Other portions of 
     the EAJA will continue to be governed by the definition of 
     ``party'' as appears in current law.
       The comparison called for in the Act is always between a 
     ``demand'' by the government for injunctive and monetary 
     relief taken as a whole and the final outcome of the case in 
     terms of injunctive and monetary relief taken as a whole. As 
     used in these amendments, the term ``demand'' means an 
     express written demand that leads directly to an adversary 
     adjudication or civil action. Thus, the ``demand'' at issue 
     would be the government's demand that was pending upon 
     commencement of the adjudication or action. A written demand 
     by the government for performance or payment qualifies under 
     this section regardless of form; it would include, but not be 
     limited to, a fine, penalty notice, demand letter or 
     citation. In the case of an adversary adjudication, the 
     demand would often be a statement of the ``Definitive Penalty 
     Amount.'' In the case of a civil action brought by the United 
     States, the demand could be in the form of a demand for 
     settlement issued prior to commencement to the litigation. In 
     a civil action to review the determination of an 
     administrative proceeding, the demand could be the demand 
     that led to such proceeding. However, the term ``demand'' 
     should not be read to extend to a mere recitation of facts 
     and law in a complaint. The bill's definition of the term 
     ``demand'' expressly excludes a recitation of the maximum 
     statutory penalty in the complaint or elsewhere when 
     accompanied by an express demand for a lesser amount. This 
     definition is not intended to suggest that a statement of the 
     maximum statutory penalty somewhere other than the 
     complaint, which is not accompanied by an express demand 
     for a lesser amount, is per se a demand, but would depend 
     on the circumstances.
       This test should not be a simple mathematical comparison. 
     The Committee intends for it to be applied in such a way that 
     it identifies and corrects situations where the agency's 
     demand is so far in excess of the true value of the case, as 
     compared to the final outcome, and where it appears the 
     agency's assessment or enforcement action did not represent a 
     reasonable effort to match the penalty to the actual facts 
     and circumstances of the case.
       In addition, the bill excludes awards in connection with 
     willful violations, bad faith actions and in special 
     circumstances that would make such an award unjust. These 
     additional factors are intended to provide a ``safety valve'' 
     to ensure that the government is not unduly deterred from 
     advancing its case in good faith. Whether a violation is 
     ``willful'' should be determined in accordance with existing 
     judicial construction of the subject matter to which the case 
     relates. Special circumstances are intended to include both 
     legal and factual considerations which may make it unjust to 
     require the public to pay attorneys fees and costs, even in 
     situations where the ultimate award is significantly less 
     than the amount demanded. Special circumstances could include 
     instances where the party seeking fees engaged in a flagrant 
     violation of the law, endangered the lives of others, or 
     engaged in some other type of conduct that would make the 
     award of the fees unjust. The actions covered by ``bad 
     faith'' include the conduct of the party seeking fees both at 
     the time of the underlying violation, and during the 
     enforcement action. For example, if the party seeking fees 
     attempted to elude government officials, cover up its 
     conduct, or otherwise impede the government's law enforcement 
     activities, then attorneys' fees and costs should not be 
     awarded.
       The Committee does not intend by this provision to 
     compensate a party for fees and costs which it would have 
     been expended even had the government demand been reasonable 
     under the circumstances. The amount of the award which a 
     party may recover under this section is limited to the 
     proportion of attorneys' fees and costs attributable to the 
     excessive demand. Thus, for example, if the ultimate decision 
     of the administrative law judge or the judgment of the court 
     is twenty percent of the relevant government demand, the 
     defendant might be entitled to eighty percent of fees and 
     costs. The ultimate determination of the amount of fees and 
     costs to be awarded is to be made by the administrative law 
     judge or the court, based on the facts and circumstances of 
     each case.
       The Act also increases the maximum hourly rate for 
     attorneys fees under the EAJA from $75 to $125. Agencies 
     could avoid the possibility of paying attorneys fees by 
     settling with the small entity prior to final judgement. The 
     Committee anticipates that if a settlement is reached, all 
     further claims of either party, including claims for 
     attorneys fees, could be included as part of the settlement. 
     The government may obtain a release specifically including 
     attorneys fees under EAJA.
       Additional language is included in the Act to ensure that 
     the legislation did not violate of the PAYGO requirements of 
     the Budget Act. This language requires agencies to satisfy 
     any award of attorneys fees or expenses arising from an 
     agency enforcement action from their discretionary 
     appropriated funds, but does not require that an agency seek 
     or obtain an individual line item or earmarked appropriation 
     for these amounts.
     Section 233
       The new provisions of the EAJA apply to civil actions and 
     adversary adjudications commenced on or after the date of 
     enactment.

           Subtitle D--Regulatory Flexibility Act Amendments

       The Regulatory Flexibility Act (5 U.S.C. 601 et seq.), was 
     first enacted in 1980. Under its terms, federal agencies are 
     directed to consider the special needs and concerns of small 
     entities--small businesses, small local governments, farmers, 
     etc.--whenever they engage in a rulemaking subject to the 
     Administrative Procedure Act. The agencies must then prepare 
     and publish a regulatory flexibility analysis of the impact 
     of the proposed rule on small entities, unless the head of 
     the agency certifies that the proposed rule will not ``have a 
     significant economic impact on a substantial number of small 
     entities.''
       Under current law, there is no provision for judicial 
     review of agency action under the RFA. This makes the 
     agencies completely unaccountable for their failure to comply 
     with its requirements. This current prohibition on judicial 
     enforcement of the RFA is contrary to the general principle 
     of administrative law, and it has long been criticized by 
     small business owners. Many small business owners believe 
     that agencies have given lip service at best to the RFA, and 
     small entities have been denied legal recourse to enforce the 
     Act's requirements. Subtitle D gives teeth to the RFA by 
     specifically providing for judicial review of selected 
     sections.
     Section 241
       H.R. 3136 expands the coverage of the RFA to include 
     Internal Revenue Service interpretative rules that provide 
     for a ``collection of information'' from small entities. Many 
     IRS rulemakings involve ``interpretative rules'' that IRS 
     contends need not be promulgated pursuant to section 553 of 
     the Administrative Procedures Act. However, these 
     interpretative rules may have significant economic effects on 
     small entities and should be covered by the RFA. The 
     amendment applies to those IRS interpretative rulemakings 
     that are published in the Federal Register for notice and 
     comment and that will be codified in the Code of Federal 
     Regulations. This limitation is intended to exclude from the 
     RFA other, less formal IRS publications such as revenue 
     rulings, revenue procedures, announcements, publications or 
     private letter rulings.
       The requirement that IRS interpretative rules comply with 
     the RFA is further limited to those involving a ``collection 
     of information.'' The term ``collection of information'' is 
     defined in the Act to include the obtaining, causing to be 
     obtained, soliciting of facts or opinions by an agency 
     through a variety of means that would include the use of 
     written report forms, schedules, or reporting or other record 
     keeping requirements. It would also include any requirements 
     that require the disclosure to third parties of any 
     information. The intent of this phrase ``collection of 
     information'' in the context of the RFA is to include all IRS 
     interpretative rules of general applicability that lead to or 
     result in small entities keeping records, filing reports or 
     otherwise providing information to IRS or third parties.

[[Page E574]]

       While the term ``collection of information'' also is used 
     in the Paperwork Reduction Act (44 U.S.C. 3502(4))(``PRA''), 
     the purpose of the term in the context of the RFA is 
     different than the purpose of the term in the PRA. Thus, 
     while some courts have interpreted the PRA to exempt from its 
     requirements certain recordkeeping requirements that are 
     explicitly required by statute, such an interpretation would 
     be inappropriate in the context of the RFA. If a collection 
     of information is explicitly required by a regulation that 
     will ultimately be codified in the Code of Federal 
     Regulations (``CFR''), the effect might be to limit the 
     possible regulatory alternatives available to the IRS in the 
     proposed rulemaking, but would not exempt the IRS from 
     conducting a regulatory flexibility analysis.
       Some IRS interpretative rules merely reiterate or restate 
     the statutorily required tax liability. While a small 
     entity's tax liability may be a burden, the RFA cannot act to 
     supersede the statutorily required tax rate. However, most 
     IRS interpretative rules involve some aspect of defining or 
     establishing requirements for compliance with the CFR, or 
     otherwise require small entities to maintain records to 
     comply with the CFR now be covered by the RFA. One of the 
     primary purposes of the RFA is to reduce the compliance 
     burdens on small entities whenever possible under the 
     statute. To accomplish this purpose, the IRS should take an 
     expansive approach in interpreting the phrase ``collection of 
     information'' when considering whether to conduct a 
     regulatory flexibility analysis.
       The courts generally are given broad discretion to 
     formulate appropriate remedies under the facts and 
     circumstances of each individual case. The rights of judicial 
     review and remedial authority of the courts provided in the 
     Act as to IRS interpretative rules should be applied in a 
     manner consistent with the purposes of the Anti-Injunction 
     Act (26 U.S.C. 7421), which may limit remedies available in 
     particular circumstances. The RFA, as amended by the Act, 
     permits the court to remand a rule to an Agency for further 
     consideration of the rule's impact on small entities. The 
     amendment also directs the court to consider the public 
     interest in determining whether or not to delay enforcement 
     of a rule against small entities pending agency compliance 
     with the court's findings. The filing of an action requesting 
     judicial review pursuant to this section does not 
     automatically stay the implementation of the rule. Rather, 
     the court has discretion in determining whether enforcement 
     of the rule shall be deferred as it relates to small 
     entities. In the context of IRS interpretative rulemakings, 
     this language should be read to require the court to give 
     appropriate deference to the legitimate public interest in 
     the assessment and collection of taxes reflected by the Anti-
     Injunction Act. The court should not exercise its discretion 
     more broadly than necessary under the circumstances or in 
     a way that might encourage excessive litigation.
       If an agency is required to publish an initial regulatory 
     flexibility analysis, the agency also must publish a final 
     regulatory flexibility analysis. In the final regulatory 
     flexibility analysis, agencies will be required to describe 
     the impacts of the rule on small entities and to specify the 
     actions taken by the agency to modify the proposed rule to 
     minimize the regulatory impact on small entities. Nothing in 
     the bill directs the agency to choose a regulatory 
     alternative that is not authorized by the statute granting 
     regulatory authority. The goal of the final regulatory 
     flexibility analysis is to demonstrate how the agency has 
     minimized the impact on small entities consistent with the 
     underlying statute and other applicable legal requirements.
     Section 242
       H.R. 3136 removes the current prohibition on judicial 
     review of agency compliance with certain sections of the RFA. 
     It allows adversely affected small entities to seek judicial 
     review of agency compliance with the RFA within one year 
     after final agency action, except where a provision of law 
     requires a shorter period for challenging a final agency 
     action. The amendment is not intended to encourage or allow 
     spurious lawsuits which might hinder important governmental 
     functions. The Act does not subject all regulations issued 
     since the enactment of the RFA to judicial review. The one-
     year limitation on seeking judicial review ensures that this 
     legislation will not permit indefinite, retroactive 
     application of judicial review.
       For rules promulgated after the effective date, judicial 
     review will be available pursuant to this Act. The procedures 
     and standards for review to be used are those set forth in 
     the Administrative Procedure Act at Chapter 7 of Title 5. If 
     the court finds that a final agency action was arbitrary, 
     capricious, an abuse of discretion or otherwise not in 
     accordance with the law, the court may set aside the rule or 
     order the agency to take other corrective action. The court 
     may also decide that the failure to comply with the RFA 
     warrants remanding the rule to the agency or delaying the 
     application of the rule to small entities pending completion 
     of the court ordered corrective action. However, in some 
     circumstances, the court may find that there is good cause to 
     allow the rule to be enforced and to remain in effect pending 
     the corrective action.
       Judicial review of the RFA is limited to agency compliance 
     with the requirements of sections 601, 604, 605(b), 608(b) 
     and 610. Review under these sections is not limited to the 
     agency's compliance with the procedural aspects of the RFA; 
     final agency action under these sections will be subject to 
     the normal judicial review standards of Chapter 7 of Title 5. 
     While the Committees determined that agency compliance with 
     sections 607 and 609(a) of the RFA is important, it did not 
     believe that a party should be entitled to judicial review of 
     agency compliance with those sections in the absence of a 
     judiciable claim for review of agency compliance with section 
     604. Therefore, under the Act, an agency's failure to comply 
     with sections 607 or 609(a) may be reviewed only in 
     conjunction with a challenge under section 604 of the RFA.
     Section 243
       Section 243 of the Act alters the content of the statement 
     which an agency must publish when making a certification 
     under section 605 of the RFA that a regulation will not 
     impose a significant economic impact on a substantial number 
     of small entities. Current law requires only that the agency 
     publish a ``succinct statement explaining the reasons for 
     such certification.'' The Committee believes that more 
     specific justification for its determination should be 
     provided by the agency. Under the amendment, the agency must 
     state its factual basis for the certification. This will 
     provide a record upon which a court may review the agency's 
     determination in accordance with the judicial review 
     provisions of the Administrative Procedure Act.
     Section 244
       H.R. 3136 amends the existing requirements of section 609 
     of the RFA for small business participation in the rulemaking 
     process by incorporating a modified version of S. 917, the 
     Small Business Advocacy Act, which was introduced by Senator 
     Domenici, to provide early input from small businesses into 
     the regulatory process. For proposed rules with a significant 
     economic impact on a substantial number of small entities, 
     EPA and OSHA would have to collect advice and recommendations 
     from small businesses to better inform the agency's 
     regulatory flexibility analysis on the potential impacts of 
     the rule. The House version drops the provision of the Senate 
     bill that would have required the panels to reconvene prior 
     to publication of the final rule.
       The agency promulgating the rule would consult with the 
     SBA's Chief Counsel for Advocacy to identify individuals who 
     are representative of affected small businesses. The agency 
     would designate a senior level official to be responsible for 
     implementing this section and chairing an interagency review 
     panel for the rule. Before the publication of an initial 
     regulatory flexibility analysis for a proposed EPA or OSHA 
     rule, the SBA's Chief Counsel for Advocacy will gather 
     information from individual representatives of small 
     businesses and other small entities, such as small local 
     governments, about the potential impacts of that proposed 
     rule. This information will then be reviewed by a panel 
     composed of members from EPA or OSHA, OIRA, and the Chief 
     Counsel for Advocacy. The panel will then issue a report on 
     those individuals' comments, which will become part of the 
     rulemaking record. The review panel's report and related 
     rulemaking information will be placed in the rulemaking 
     record in a timely fashion so that others who are interested 
     in the proposed rule may have an opportunity to review that 
     information and submit their own responses for the record 
     before the close of the agency's public comment period for 
     the proposed rule. The legislation includes limits on the 
     period during which the review panel conducts its review. It 
     also creates a limited process allowing the Chief Counsel for 
     Advocacy to waive certain requirements of the section after 
     consultation with the Office of Information and Regulatory 
     Affairs and small businesses.
     Section 245
       This section provides that the effective date of subtitle D 
     is 90 days after enactment. Proposed rules published after 
     the effective date must be accompanied by an initial 
     regulatory flexibility analysis or a certification under 
     section 605 of the RFA. Final rules published after the 
     effective date must be accompanied by a final regulatory 
     flexibility analysis or a certification under section 605 of 
     the RFA, regardless of when the rule was first proposed. Thus 
     judicial review shall apply to any final regulation published 
     after the effective date regardless of when the rule was 
     proposed. However, IRS interpretative rules proposed prior to 
     enactment will not be subject to the amendments made in this 
     subchapter expanding the scope of the RFA to include IRS 
     interpretative rules. Thus, the IRS could finalize previously 
     proposed interpretative rules according to the terms of 
     currently applicable law, regardless of when the final 
     interpretative rule is published.

               Subtitle E--Congressional review subtitle

       Subtitle E adds a new chapter to the Administrative 
     Procedure Act (APA), ``Congressional Review of Agency 
     Rulemaking,'' which is codified in the United States Code as 
     chapter 8 of title 5. The congressional review chapter 
     creates a special mechanism for Congress to review new rules 
     issued by federal agencies (including modification, repeal, 
     or reissuance of existing rules). During the review period, 
     Congress may use expedited procedures to enact joint 
     resolutions of disapproval to overrule the federal rulemaking 
     actions. In the 104th Congress, four slightly different 
     versions of this legislation passed the Senate and two 
     different versions passed the House. Yet, no formal 
     legislative history

[[Page E575]]

     document was prepared to explain the legislation or the 
     reasons for changes in the final language negotiated between 
     the House and Senate. This joint statement of the committees 
     of jurisdiction on the congressional review subtitle is 
     intended to cure this deficiency.

                               Background

       As the number and complexity of federal statutory programs 
     has increased over the last fifty years, Congress has come to 
     depend more and more upon Executive Branch agencies to fill 
     out the details of the programs it enacts. As complex as some 
     statutory schemes passed by Congress are, the implementing 
     regulation is often more complex by several orders of 
     magnitude. As more and more of Congress' legislative 
     functions have been delegated to federal regulatory agencies, 
     many have complained that Congress has effectively abdicated 
     its constitutional role as the national legislature in 
     allowing federal agencies so much latitude in implementing 
     and interpreting congressional enactments.
       In many cases, this criticism is well founded. Our 
     constitutional scheme creates a delicate balance between the 
     appropriate roles of the Congress in enacting laws, and the 
     Executive Branch in implementing those laws. This legislation 
     will help to redress the balance, reclaiming for Congress 
     some of its policymaking authority, without at the same 
     time requiring Congress to become a super regulatory 
     agency.
       This legislation establishes a government-wide 
     congressional review mechanism for most new rules. This 
     allows Congress the opportunity to review a rule before it 
     takes effect and to disapprove any rule to which Congress 
     objects. Congress may find a rule to be too burdensome, 
     excessive, inappropriate or duplicative. Subtitle E uses the 
     mechanism of a joint resolution of disapproval which requires 
     passage by both houses of Congress and the President (or veto 
     by the President and a two-thirds' override by Congress) to 
     be effective. In other words, enactment of a joint resolution 
     of disapproval is the same as enactment of a law.
       Congress has considered various proposals for reviewing 
     rules before they take effect for almost twenty years. Use of 
     a simple (one-house), concurrent (two-house), or joint (two 
     houses plus the President) resolution are among the options 
     that have been debated and in some cases previously 
     implemented on a limited basis. In INS v. Chadha, 462 U.S. 
     919 (1983), the Supreme Court struck down as unconstitutional 
     any procedure where executive action could be overturned by 
     less than the full process required under the Constitution to 
     make laws--that is, approval by both houses of Congress and 
     presentment to the President. That narrowed Congress' options 
     to use a joint resolution of disapproval. The one-house or 
     two-house legislative veto (as procedures involving simple 
     and concurrent resolutions were previously called), was thus 
     voided.
       Because Congress often is unable to anticipate the numerous 
     situations to which the laws it passes must apply, Executive 
     Branch agencies sometimes develop regulatory schemes at odds 
     with congressional expectations. Moreover, during the time 
     lapse between passage of legislation and its implementation, 
     the nature of the problem addressed, and its proper solution, 
     can change. Rules can be surprisingly different from the 
     expectations of Congress or the public. Congressional review 
     gives the public the opportunity to call the attention of 
     politically accountable, elected officials to concerns about 
     new agency rules. If these concerns are sufficiently serious, 
     Congress can stop the rule.

        Brief procedural history of congressional review chapter

       In the 104th Congress, the congressional review legislation 
     originated as S. 348, the ``Regulatory Oversight Act,'' which 
     was introduced on February 2, 1995. The text of S. 348 was 
     offered by its sponsors, Senators Don Nickles and Harry Reid, 
     as a substitute amendment to S. 219, the ``Regulatory 
     Transition Act of 1995.'' As amended, S. 219 provided for a 
     45-day delay on the effectiveness of a major rule, and 
     provided expedited procedures that Congress could use to pass 
     resolutions disapproving of the rule. On March 29, 1995, the 
     Senate passed the amended version of S. 219 by a vote of 100-
     0. The Senate later substituted the text of S. 219 for the 
     text of H.R. 450, the House passed ``Regulatory Transition 
     Act of 1995.'' Although the House did not agree to a 
     conference on H.R. 450 and S. 219, both Houses continued to 
     incorporate the congressional review provisions in other 
     legislative packages. On May 25, the Senate Governmental 
     Affairs Committee reported out S. 343, the ``Comprehensive 
     Regulatory Reform Act of 1995,'' and S. 291, the 
     ``Regulatory Reform Act of 1995,'' both with congressional 
     review provisions. On May 26, 1995, the Senate Judiciary 
     Committee reported out a different version of S. 343, the 
     ``Comprehensive Regulatory Reform Act of 1995,'' which 
     also included a congressional review provision. The 
     congressional review provision in S. 343 that was debated 
     by the Senate was quite similar to S. 219, except that the 
     delay period in the effectiveness of a major rule was 
     extended to 60 days and the legislation did not apply to 
     rules issued prior to enactment. A fillibuster of S. 343, 
     unrelated to the congressional review provisions, led to 
     the withdrawal of that bill.
       The House next took up the congressional review legislation 
     by attaching a version of it (as section 3006) to H.R. 2586, 
     the first debt limit extension bill. The House made several 
     changes in the legislation that was attached to H.R. 2586, 
     including a provision that would allow the expedited 
     procedures also to apply to resolutions disapproving of 
     proposed rules, and provisions that would have extended the 
     60-day delay on the effectiveness of a major rule for any 
     period when the House or Senate was in recess for more than 
     three days. On November 9, 1995 both the House and Senate 
     passed this version of the congressional review legislation 
     as part of the first debt limit extension bill. President 
     Clinton vetoed the bill a few days later, for reasons 
     unrelated to the congressional review provision.
       On February 29, 1996, a House version of the congressional 
     review legislation was published in the Congressional Record 
     as title III of H.R. 994, which was scheduled to be brought 
     to the House floor in the coming weeks. The congressional 
     review title was almost identical to the legislation approved 
     by both Houses in H.R. 2586. On March 19, 1996, the Senate 
     adopted a congressional review amendment by voice vote to S. 
     942, which bill passed the Senate 100-0. The congressional 
     review legislation in S. 942 was similar to the original 
     version of S. 219 that passed the Senate on March 29, 1995.
       Soon after passage of S. 942, representatives of the 
     relevant House and Senate committees and principal sponsors 
     of the congressional review legislation met to craft a 
     congressional review subtitle that was acceptable to both 
     Houses and would be added to the debt limit bill that was 
     scheduled to be taken up in Congress the week of March 24. 
     The final compromise language was the result of these joint 
     discussions and negotiations.
       On March 28, 1996, the House and Senate passed title III, 
     the ``Small Business Regulatory Enforcement Fairness Act of 
     1996,'' as part of the second debt limit bill, H.R. 3136. 
     There was no separate vote in either body on the 
     congressional review subtitle or on title III of H.R. 3136. 
     However, title III received broad support in the House and 
     the entire bill passed in the Senate by unanimous consent. 
     The President signed H.R. 3136 into law on March 29, 1996, 
     exactly one year after the first congressional review bill 
     passed the Senate.

               Submission of rules to Congress and to GAO

        Pursuant to subsection 801(a)(1)(A), a federal agency 
     promulgating a rule must submit a copy of the rule and a 
     brief report about it to each House of Congress and to the 
     Comptroller General before the rule can take effect. In 
     addition to a copy of the rule, the report shall contain a 
     concise general statement relating to the rule, including 
     whether it is a major rule under the chapter, and the 
     proposed effective date of the rule. Because most rules 
     covered by the chapter must be published in the Federal 
     Register before they can take effect, it is not expected that 
     the submission of the rule and the report to Congress and the 
     Comptroller General will lead to any additional delay.
       Section 808 provides the only exception to the requirement 
     that rules must be submitted to each House of Congress and 
     the Comptroller General before they can take effect. 
     Subsection 808(1) excepts specified rules relating to 
     commercial, recreational, or subsistence hunting, fishing, 
     and camping. Subsection 808(2) excepts certain rules that are 
     not subject to notice-and-comment procedures. It provides 
     that if the relevant agency finds ``for good cause ... that 
     notice and public procedure thereon are impracticable, 
     unnecessary, or contrary to the public interest, [such rules] 
     shall take effect at such time as the Federal agency 
     promulgating the rule determines.'' Although rules described 
     in section 808 shall take effect when the relevant Federal 
     agency determines pursuant to other provisions of law, the 
     federal agency still must submit such rules and the 
     accompanying report to each House of Congress and to the 
     Comptroller General as soon as practicable after 
     promulgation. Thus, rules described in section 808 are 
     subject to congressional review and the expedited procedures 
     governing joint resolutions of disapproval. Moreover, the 
     congressional review period will not begin to run until such 
     rules and the accompanying reports are submitted to each 
     House of Congress and the Comptroller General.
       In accordance with current House and Senate rules, covered 
     agency rules and the accompanying report must be separately 
     addressed and transmitted to the Speaker of the House (the 
     Capitol, Room H-209), the President of the Senate (the 
     Capitol, Room S-212), and the Comptroller General (GAO 
     Building, 441 G Street, N.W., Room 1139). Except for rules 
     described in section 808, any covered rule not submitted to 
     Congress and the Comptroller General will remain ineffective 
     until it is submitted pursuant to subsection 801(a)(1)(A). In 
     almost all cases, there will be sufficient time for an agency 
     to submit notice-and-comment rules or other rules that must 
     be published to these legislative officers during normal 
     office hours. There may be a rare instance, however, when a 
     federal agency must issue an emergency rule that is effective 
     upon actual notice and does not meet one of the section 808 
     exceptions. In such a rare case, the federal agency may 
     provide contemporaneous notice to the Speaker of the House, 
     the President of the Senate, and the Comptroller General. 
     These legislative officers have accommodated the receipt of 
     similar, emergency communications in the past and will 
     utilize the same means to

[[Page E576]]

     receive emergency rules and reports during non-business 
     hours. If no other means of delivery is possible, delivery of 
     the rule and related report by telefax to the Speaker of the 
     House, the President of the Senate, and the Comptroller 
     General shall satisfy the requirements of subsection 
     801(a)(1)(A).

          Additional delay in the effectiveness of major rules

        Subsection 553(d) of the APA requires publication or 
     service of most substantive rules at least 30 days prior to 
     their effective date. Pursuant to subsection 801(a)(3)(A), a 
     major rule (as defined in subsection 804(2)) shall not take 
     effect until at least 60 calendar days after the later of the 
     date on which the rule and accompanying information is 
     submitted to Congress or the date on which the rule is 
     published in the Federal Register, if it is so published. If 
     the Congress passes a joint resolution of disapproval and the 
     President vetoes such resolution, the delay in the 
     effectiveness of a major rule is extended by subsection 
     801(a)(3)(B) until the earlier date on which either House of 
     Congress votes and fails to override the veto or 30 session 
     days 1 after the date on which the Congress receives the 
     veto and objections from the President. By necessary 
     implication, if the Congress passes a joint resolution of 
     disapproval within the 60 calendar days provided in 
     subsection 801(a)(3)(A), the delay period in the 
     effectiveness of a major rule must be extended at least until 
     the President acts on the joint resolution or until the time 
     expires for the President to act. Any other result would be 
     inconsistent with subsection 801(a)(3)(B), which extends the 
     delay in the effectiveness of a major rule for a period of 
     time after the President vetoes a resolution.
---------------------------------------------------------------------------
     \1\  In the Senate, a ``session day'' is a calendar day in 
     which the Senate is in session. In the House of 
     Representatives, the same term is normally expressed as a 
     ``legislative day.'' In the congressional review chapter, 
     however, the term ``session day'' means both a ``session 
     day'' of the Senate and a ``legislative day'' of the House of 
     Representatives unless the context of the sentence or 
     paragraph indicates otherwise.
---------------------------------------------------------------------------
       Of course, if Congress fails to pass a joint resolution of 
     disapproval within the 60-day period provided by subsection 
     801(a)(3)(A), subsection 801(a)(3)(B) would not apply and 
     would not further delay the effective date of the rule. 
     Moreover, pursuant to subsection 801(a)(5), the effective 
     date of a rule shall not be delayed by this chapter beyond 
     the date on which either house of Congress votes to reject a 
     joint resolution of disapproval.
       Although it is not expressly provided in the congressional 
     review chapter, it is the committees' intent that a rule may 
     take effect if an adjournment of Congress prevents the 
     President from returning his veto and objections within the 
     meaning of the Constitution. Such will be the case if the 
     President does not act on a joint resolution within 10 days 
     (Sundays excepted) after it is presented to him, and ``the 
     Congress by their Adjournment prevent its Return'' within the 
     meaning of Article I, Sec. 7, cl. 2, or when the President 
     affirmatively vetoes a resolution during such an adjournment. 
     This is the logical result because Congress cannot act to 
     override these vetoes. Congress would have to begin anew, 
     pass a second resolution, and present it to the President in 
     order for it to become law. It is also the committees' intent 
     that a rule may take effect immediately if the President 
     returns a veto and his objections to Congress but Congress 
     adjourns its last session sine die before the expiration of 
     time provided in subsection 801(a)(3)(B). Like the situations 
     described immediately above, no subsequent Congress can act 
     further on the veto, and the next Congress would have to 
     begin anew, pass a second resolution of disapproval, and 
     present it to the President in order for it to become law.

         Purpose of and exceptions to the delay of major rules

       The reason for the delay in the effectiveness of a major 
     rule beyond that provided in APA subsection 553(d) is to try 
     to provide Congress with an opportunity to act on resolutions 
     of disapproval before regulated parties must invest the 
     significant resources necessary to comply with a major rule. 
     Congress may continue to use the expedited procedures to pass 
     resolutions of disapproval for a period of time after a major 
     rule takes effect, but it would be preferable for Congress to 
     act during the delay period so that fewer resources would be 
     wasted. To increase the likelihood that Congress would act 
     before a major rule took effect, the committees agreed on an 
     approximately 60-day delay period in the effective date of a 
     major rule, rather than an approximately 45-day delay period 
     in some earlier versions of the legislation.
       There are four exceptions to the required delay in the 
     effectiveness of a major rule in the congressional review 
     chapter. The first is in subsection 801(c), which provides 
     that a major rule is not subject to the delay period of 
     subsection 801(a)(3) if the President determines in an 
     executive order that one of four specified situations exist 
     and notifies Congress of his determination. The second is in 
     subsection 808(1), which excepts specified rules relating to 
     commercial, recreational, or subsistence hunting, fishing, 
     and camping from the initial delay specified in subsection 
     801(a)(1)(A) and from the delay in the effective date of a 
     major rule provided in subsection 801(a)(3). The third is in 
     subsection 808(2), which excepts certain rules from the 
     initial delay specified in subsection 801(a)(1)(A) and from 
     the delay in the effective date of a major rule provided in 
     subsection 801(a)(3) if the relevant agency finds ``for good 
     cause . . . that notice and public procedure thereon are 
     impracticable, unnecessary, or contrary to the public 
     interest.'' This ``good cause'' exception in subsection 
     808(2) is taken from the APA and applies only to rules which 
     are exempt from notice and comment under subsection 553(b)(B) 
     or an analogous statute. The fourth exception is in 
     subsection 804(2). Any rule promulgated under the 
     Telecommunications Act of 1996 or any amendments made by that 
     Act that otherwise could be classified as a ``major rule'' is 
     exempt from that definition and from the 60-day delay in 
     section 801(a)(3). However, such an issuance still would fall 
     within the definition of ``rule'' and would be subject to the 
     requirements of the legislation for non-major rules. A 
     determination under subsection 801(c), subsection 804(2), or 
     section 808 shall have no effect on the procedures to enact 
     joint resolutions of disapproval.

A court may not stay or suspend the effectiveness of a rule beyond the 
    period specified in section 801 simply because a resolution of 
                   disapproval is pending in Congress

       The committees discussed the relationship between the 
     period of time that a major rule is delayed and the period of 
     time during which Congress could use the expedited procedures 
     in section 802 to pass a resolution of disapproval. Although 
     it would be best for Congress to act pursuant to this chapter 
     before a major rule goes into effect, it was recognized that 
     Congress could not often act immediately after a rule was 
     issued because it may be issued during a recesses of 
     Congress, shortly before such recesses, or during other 
     periods when Congress cannot devote the time to complete 
     prompt legislative action. Accordingly, the committees  
     determined that the proper public policy was to give 
     Congress an adequate opportunity to deliberate and act on 
     joint resolutions of disapproval, while ensuring that 
     major rules could go into effect without unreasonable 
     delay. In short, the committees decided that major rules 
     could take effect after an approximate 60-day delay, but 
     the period governing the expedited procedures in section 
     802 for review of joint resolution of disapproval would 
     extend for a period of time beyond that.
       Accordingly, courts may not stay or suspend the 
     effectiveness of any rule beyond the periods specified in 
     section 801 simply because a joint resolution is pending 
     before Congress. Such action would be contrary to the many 
     express provisions governing when different types of rules 
     may take effect. Such court action also would be contrary to 
     the committees' intent because it would upset an important 
     compromise on how long a delay there should be on the 
     effectiveness of a major rule. The final delay period was 
     selected as a compromise between the period specified in the 
     version that passed the Senate on March 19, 1995 and the 
     version that passed both Houses on November 9, 1995. It is 
     also the committees' belief that such court action would be 
     inconsistent with the principles of (and potentially violate) 
     the Constitution, art. I, Sec. 7, cl. 2, in that courts may 
     not give legal effect to legislative action unless it results 
     in the enactment of law pursuant that Clause. See INS v. 
     Chadha, 462 U.S. 919 (1983). Finally, the committees believe 
     that a court may not predicate a stay on the basis of 
     possible future congressional action because it would be 
     improper for a court to rule that the movant had demonstrated 
     a ``likelihood of success on the merits,'' unless and until a 
     joint resolution is enacted into law. A judicial stay prior 
     to that time would raise serious separation of powers 
     concerns because it would be tantamount to the court making a 
     prediction of what Congress is likely to do and then 
     exercising its own power in furtherance of that prediction. 
     Indeed, the committees believe that Congress may have been 
     reluctant to pass congressional review legislation at all if 
     its action or inaction pursuant to this chapter would be 
     treated differently than its action or inaction regarding any 
     other bill or resolution.

   Time periods governing passage of joint resolutions of disapproval

       Subsection 802(a) provides that a joint resolution 
     disapproving of a particular rule may be introduced in either 
     House beginning on the date the rule and accompanying report 
     are received by Congress until 60 calendar days thereafter 
     (excluding days either House of Congress is adjourned for 
     more than 3 days during a session of Congress). But if 
     Congress did not have sufficient time in a previous session 
     to introduce or consider a resolution of disapproval, as set 
     forth in subsection 801(d), the rule and accompanying report 
     will be treated as if it were first received by Congress on 
     the 15th session day in the Senate, or 15th legislative day 
     in the House, after the start of its next session. When a 
     rule was submitted near the end of a Congress or prior to the 
     start of the next Congress, a joint resolution of disapproval 
     regarding that rule may be introduced in the next Congress 
     beginning on the 15th session day in the Senate or the 15th 
     legislative day in the House until 60 calendar days 
     thereafter (excluding days either House of Congress is 
     adjourned for more than 3 days during the session) regardless 
     of whether such a resolution was introduced in the prior 
     Congress. Of course, any joint resolution pending from the 
     first session of a Congress, may be considered further in 
     the next session of the same Congress.
       Subsections 802(c)-(d) specify special procedures that 
     apply to the consideration of a

[[Page E577]]

     joint resolution of disapproval in the Senate. Subsection 
     802(c) allows 30 Senators to petition for the discharge of 
     resolution from a Senate committee after a specified period 
     of time (the later of 20 calendar days after the rule is 
     submitted to Congress or published in the Federal Register, 
     if it is so published). Subsection 802(d) specifies 
     procedures for the consideration of a resolution on the 
     Senate floor. Such a resolution is highly privileged, points 
     of order are waived, a motion to postpone consideration is 
     not in order, the resolution is unamendable, and debate on 
     the joint resolution and ``on all debatable motions and 
     appeals in connection therewith'' (including a motion to 
     proceed) is limited to no more than 10 hours.
       Subsection 802(e) provides that the special Senate 
     procedures specified in subsections 802(c)-(d) shall not 
     apply to the consideration of any joint resolution of 
     disapproval of a rule after 60 session days of the Senate 
     beginning with the later date that rule is submitted to 
     Congress or published, if it is so published. However, if a 
     rule and accompanying report are submitted to Congress 
     shortly before the end of a session or during an intersession 
     recess as described in subsection 801(d)(1), the special 
     Senate procedures specified in subsections 802(c)-(d) shall 
     expire 60 session days after the 15th session day of the 
     succeeding session of Congress--or on the 75th session day 
     after the succeeding session of Congress first convenes. For 
     purposes of subsection 802(e), the term ``session day'' 
     refers only to a day the Senate is in session, rather than a 
     day both Houses are in session. However, in computing the 
     time specified in subsection 801(d)(1), that subsection 
     specifies that there shall be an additional period of review 
     in the next session if either House did not have an adequate 
     opportunity to complete action on a joint resolution. Thus, 
     if either House of Congress did not have adequate time to 
     consider a joint resolution in a given session (60 session 
     days in the Senate and 60 legislative days in the House), 
     resolutions of disapproval may be introduced or reintroduced 
     in both Houses in the next session, and the special Senate 
     procedures specified in subsection 802(c)-(d) shall apply in 
     the next session of the Senate.
       If a joint resolution of disapproval is pending when the 
     expedited Senate procedures specified in subsections 802(c)-
     (d) expire, the resolution shall not die in either House but 
     shall simply be considered pursuant to the normal rules of 
     either House--with one exception. Subsection 802(f) sets 
     forth one unique provision that does not expire in either 
     House. Subsection 802(f) provides procedures for passage of a 
     joint resolution of disapproval when one House passes a joint 
     resolution and transmits it to the other House that has not 
     yet completed action. In both Houses, the joint resolution of 
     the first House to act shall not be referred to a committee 
     but shall be held at the desk. In the Senate, a House-passed 
     resolution may be considered directly only under normal 
     Senate procedures, regardless of when it is received by the 
     Senate. A resolution of disapproval that originated in the 
     Senate may be considered under the expedited procedures only 
     during the period specified in subsection 802(e). Regardless 
     of the procedures used to consider a joint resolution in 
     either House, the final vote of the second House shall be on 
     the joint resolution of the first House (no matter when that 
     vote takes place). If the second House passes the 
     resolution, no conference is necessary and the joint 
     resolution will be presented to the President for his 
     signature. Subsection 802(f) is justified because 
     subsection 802(a) sets forth the required language of a 
     joint resolution in each House, and thus, permits little 
     variance in the joint resolutions that could be introduced 
     in each House.

        Effect of enactment of a joint resolution of disapproval

       Subsection 801(b)(1) provides that: ``A rule shall not take 
     effect (or continue), if the Congress enacts a joint 
     resolution of disapproval, described under section 802, of 
     the rule.'' Subsection 801(b)(2) provides that such a 
     disapproved rule ``may not be reissued in substantially the 
     same form, and a new rule that is substantially the same as 
     such a rule may not be issued, unless the reissued or new 
     rule is specifically authorized by a law enacted after the 
     date of the joint resolution disapproving the original 
     rule.'' Subsection 801(b)(2) is necessary to prevent 
     circumvention of a resolution of disapproval. Nevertheless, 
     it may have a different impact on the issuing agencies 
     depending on the nature of the underlying law that authorized 
     the rule.
       If the law that authorized the disapproved rule provides 
     broad discretion to the issuing agency regarding the 
     substance of such rule, the agency may exercise its broad 
     discretion to issue a substantially different rule. If the 
     law that authorized the disapproved rule did not mandate the 
     promulgation of any rule, the issuing agency may exercise its 
     discretion not to issue any new rule. Depending on the law 
     that authorized the rule, an issuing agency may have both 
     options. But if an agency is mandated to promulgate a 
     particular rule and its discretion in issuing the rule is 
     narrowly circumscribed, the enactment of a resolution of 
     disapproval for that rule may work to prohibit the reissuance 
     of any rule. The committees intend the debate on any 
     resolution of disapproval to focus on the law that authorized 
     the rule and make the congressional intent clear regarding 
     the agency's options or lack thereof after enactment of a 
     joint resolution of disapproval. It will be the agency's 
     responsibility in the first instance when promulgating the 
     rule to determine the range of discretion afforded under the 
     original law and whether the law authorizes the agency to 
     issue a substantially different rule. Then, the agency must 
     give effect to the resolution of disapproval.

   Limitation on judicial review of congressional or administrative 
                                actions

       Section 805 provides that a court may not review any 
     congressional or administrative ``determination, finding, 
     action, or omission under this chapter.'' Thus, the major 
     rule determinations made by the Administrator of the Office 
     of Information and Regulatory Affairs of the Office of 
     Management and Budget are not subject to judicial review. Nor 
     may a court review whether Congress complied with the 
     congressional review procedures in this chapter. This latter 
     limitation on the scope of judicial review was drafted in 
     recognition of the constitutional right of each House of 
     Congress to ``determine the Rules of its Proceedings,'' U.S. 
     Const., art. I, Sec. 5, cl. 2, which includes being the final 
     arbiter of compliance with such Rules.
       The limitation on a court's review of subsidiary 
     determination or compliance with congressional procedures, 
     however, does not bar a court from giving effect to a 
     resolution of disapproval that was enacted into law. A court 
     with proper jurisdiction may treat the congressional 
     enactment of a joint resolution of disapproval as it would 
     treat the enactment of any other federal law. Thus, a court 
     with proper jurisdiction may review the resolution of 
     disapproval and the law that authorized the disapproved rule 
     to determine whether the issuing agency has the legal 
     authority to issue a substantially different rule. The 
     language of subsection 801(g) is also instructive. Subsection 
     801(g) prohibits a court or agency from inferring any intent 
     of the Congress only when ``Congress does not enact a joint 
     resolution of disapproval,'' or by implication, when it has 
     not yet done so. In deciding cases or controversies properly 
     before it, a court or agency must give effect to the intent 
     of the Congress when such a resolution is enacted and becomes 
     the law of the land. The limitation on judicial review in no 
     way prohibits a court from determining whether a rule is in 
     effect. For example, the committees expect that a court might 
     recognize that a rule has no legal effect due to the 
     operation of subsections 801(a)(1)(A) or 801(a)(3).

  Enactment of a joint resolution of disapproval for a rule that was 
                           already in effect

       Subsection 801(f) provides that: ``Any rule that takes 
     effect and later is made of no force or effect by enactment 
     of a joint resolution under section 802 shall be treated as 
     though such rule had never taken effect.'' Application of 
     this subsection should be consistent with existing judicial 
     precedents on rules that are deemed never to have taken 
     effect.

           Agency information required to be submitted to GAO

       Pursuant to subsection 801(a)(1)(B), the federal agency 
     promulgating the rule shall submit to the Comptroller General 
     (and make available to each House) (i) a complete copy of the 
     cost-benefit analysis of the rule, if any, (ii) the agency's 
     actions related to the Regulatory Flexibility Act, (iii) the 
     agency's actions related to the Unfunded Mandates Reform Act, 
     and (iv) ``any other relevant information or requirements 
     under any other Act and any relevant Executive Orders.'' 
     Pursuant to subsection 801(a)(1)(B), this information must be 
     submitted to the Comptroller General on the day the agency 
     submits the rule to Congress and to GAO.
       The committees intend information supplied in conformity 
     with subsection 801(a)(1)(B)(iv) to encompass both agency-
     specific statutes and government-wide statutes and executive 
     orders that impose requirements relevant to each rule. 
     Examples of agency-specific statutes include information 
     regarding compliance with the law that authorized the rule 
     and any agency-specific procedural requirements, such as 
     section 9 of the Consumer Product Safety Act, as amended, 15 
     U.S.C. Sec. 2054 (procedures for consumer product safety 
     rules); section 6 of the Occupational Safety and Health Act 
     of 1970, as amended, 29 U.S.C. Sec. 655 (promulgation of 
     standards); section 307(d) of the Clean Air Act, as amended, 
     42 U.S.C. Sec. 7607(d) (promulgation of rules); and section 
     501 of the Department of Energy Organization Act, 42 U.S.C. 
     Sec. 7191 (procedure for issuance of rules, regulations, and 
     orders). Examples of government-wide statutes include other 
     chapters of the Administrative Procedure Act, 5 U.S.C. 
     Sec. Sec. 551-559 and 701-706; and the Paperwork Reduction 
     Act, as amended, 44 U.S.C. Sec. Sec. 3501-3520.
       Examples of relevant executive orders include E.O. No. 
     12866 (Sept. 30, 1993) (Regulatory Planning and Review); E.O. 
     No. 12606 (Sept. 2, 1987) (Family Considerations in Policy 
     Formulation and Implementation); E.O. No. 12612 (Oct. 26, 
     1987) (Federalism Considerations in Policy Formulation and 
     Implementation); E.O. No. 12630 (Mar. 15, 1988) 
     (Government Actions and Interference with Constitutionally 
     Protected Property Rights); E.O. No. 12875 (Oct. 26, 1993) 
     (Enhancing the Intergovernmental Partnership); E.O. No. 
     12778 (Oct. 23, 1991) (Civil Justice Reform); E.O. No. 
     12988 (Feb. 5, 1996) (Civil Justice Reform) (effective May 
     5, 1996).

                       GAO reports on major rules

       Fifteen days after the federal agency submits a copy of a 
     major rule and report to each House of Congress and the 
     Comptroller General, the Comptroller General shall prepare 
     and provide a report on the major rule

[[Page E578]]

     to the committees of jurisdiction in each House. Subsection 
     801(a)(2)(B) requires agencies to cooperate with the 
     Comptroller General in providing information relevant to the 
     Comptroller General's reports on major rules. Given the 15-
     day deadline for these reports, it is essential that the 
     agencies' initial submission to the General Accounting Office 
     (GAO) contain all of the information necessary for GAO to 
     conduct its analysis. At a minimum, the agency's submission 
     must include the information required of all rules pursuant 
     to 801(a)(1)(B). Whenever possible, OMB should work with GAO 
     to alert GAO when a major rule is likely to be issued and to 
     provide as much advance information to GAO as possible on 
     such proposed major rule. In particular, OMB should attempt 
     to provide the complete cost-benefit analysis on a major 
     rule, if any, well in advance of the final rule's 
     promulgation.
       It also is essential for the agencies to present this 
     information in a format that will facilitate the GAO's 
     analysis. The committees expect that GAO and OMB will work 
     together to develop, to the greatest extent practicable, 
     standard formats for agency submissions. OMB also should 
     ensure that agencies follow such formats. The committees also 
     expect that agencies will provide expeditiously any 
     additional information that GAO may require for a thorough 
     report. The committees do not intend the Comptroller 
     General's reports to be delayed beyond the 15-day deadline 
     due to lack of information or resources unless the committees 
     of jurisdiction indicate a different preference. Of course, 
     the Comptroller General may supplement his initial report at 
     any time with any additional information, on its own, or at 
     the request of the relevant committees of jurisdiction.

         Covered agencies and entities in the executive branch

       The committees intend this chapter to be comprehensive in 
     the agencies and entities that are subject to it. The term 
     ``Federal agency'' in subsection 804(1) was taken from 5 
     U.S.C. Sec. 551(1). That definition includes ``each authority 
     of the Government'' that is not expressly excluded by 
     subsection 551(1)(A)-(H). With those few exceptions, the 
     objective was to cover each and every government entity, 
     whether it is a department, independent agency, independent 
     establishment, or government corporation. This is because 
     Congress is enacting the congressional review chapter, in 
     large part, as an exercise of its oversight and legislative 
     responsibility. Regardless of the justification for excluding 
     or granting independence to some entities from the coverage 
     of other laws, that justification does not apply to this 
     chapter, where Congress has an interest in exercising its 
     constitutional oversight and legislative responsibility as 
     broadly as possible over all agencies and entities within its 
     legislative jurisdiction.
       In some instances, federal entities and agencies issue 
     rules that are not subject to the traditional 5 U.S.C. 
     Sec. 553(c) rulemaking process. However, the committees 
     intend the congressional review chapter to cover every 
     agency, authority, or entity covered by subsection 551(1) 
     that establishes policies affecting any segment of the 
     general public. Where it was necessary, a few special 
     exceptions were provided, such as the exclusion for the 
     monetary policy activities of the Board of Governors of 
     the Federal Reserve System, rules of particular 
     applicability, and rules of agency management and 
     personnel. Where it was not necessary, no exemption was 
     provided and no exemption should be inferred from other 
     law. This is made clear by the provision of section 806 
     which states that the Act applies notwithstanding any 
     other provision of law.

                     Definition of a ``major rule''

       The definition of a ``major rule'' in subsection 804(2) is 
     taken from President Reagan's Executive Order 12291. Although 
     President Clinton's Executive Order 12866 contains a 
     definition of a ``significant regulatory action'' that is 
     seemingly as broad, several of the Administration's 
     significant rule determinations under Executive Order 12866 
     have been called into question. The committees intend the 
     term ``major rule'' in this chapter to be broadly construed, 
     including the non-numerical factors contained in the 
     subsections 804(2) (B) and (C).
       Pursuant to subsection 804(2), the Administrator of the 
     Office of Information and Regulatory Affairs in the Office of 
     Management and Budget (the Administrator) must make the major 
     rule determination. The committees believe that centralizing 
     this function in the Administrator will lead to consistency 
     across agency lines. Moreover, from 1981-93, OIRA staff 
     interpreted and applied the same major rule definition under 
     E.O. 12291. Thus, the Administrator should rely on guidance 
     documents prepared by OIRA during that time and previous 
     major rule determinations from that Office as a guide in 
     applying the statutory definition to new rules.
       Certain covered agencies, including many ``independent 
     agencies,'' include their proposed rules in the Unified 
     Regulatory Agenda published by OMB but do not normally submit 
     their final rules to OMB for review. Moreover, interpretative 
     rules and general statements of policy are not normally 
     submitted to OMB for review. Nevertheless, it is the 
     Administrator that must make the major rule determination 
     under this chapter whenever a new rule is issued. The 
     Administrator may request the recommendation of any agency 
     covered by this chapter on whether a proposed rule is a 
     major rule within the meaning of subsection 804(2), but 
     the Administrator is responsible for the ultimate 
     determination. Thus, all agencies or entities covered by 
     this chapter will have to coordinate their rulemaking 
     activity with OIRA so that the Administrator may make the 
     final, major rule determination.

                         Scope of rules covered

       The committees intend this chapter to be interpreted 
     broadly with regard to the type and scope of rules that are 
     subject to congressional review. The term ``rule'' in 
     subsection 804(3) begins with the definition of a ``rule'' in 
     subsection 551(4) and excludes three subsets of rules that 
     are modeled on APA sections 551 and 553. This definition of a 
     rule does not turn on whether a given agency must normally 
     comply with the notice-and-comment provisions of the APA, or 
     whether the rule at issue is subject to any other notice-and-
     comment procedures. The definition of ``rule'' in subsection 
     551(4) covers a wide spectrum of activities. First, there is 
     formal rulemaking under section 553 that must adhere to 
     procedures of sections 556 and 557 of title 5. Second, there 
     is informal rulemaking, which must comply with the notice-
     and-comment requirements of subsection 553(c). Third, there 
     are rules subject to the requirements of subsection 552(a)(1) 
     and (2). This third category of rules normally either must be 
     published in the Federal Register before they can adversely 
     affect a person, or must be indexed and made available for 
     inspection and copying or purchase before they can be used as 
     precedent by an agency against a non-agency party. Documents 
     covered by subsection 552(a) include statements of general 
     policy, interpretations of general applicability, and 
     administrative staff manuals and instructions to staff that 
     affect a member of the public. Fourth, there is a body of 
     materials that fall within the APA definition of ``rule'' and 
     are the product of agency process, but that meet none of the 
     procedural specifications of the first three classes. These 
     include guidance documents and the like. For purposes of this 
     section, the term rule also includes any rule, rule change, 
     or rule interpretation by a self regulatory organization that 
     is approved by a Federal agency. Accordingly, all ``rules'' 
     are covered under this chapter, whether issued at the 
     agency's initiative or in response to a petition, unless they 
     are expressly excluded by subsections 804(3)(A)-(C). The 
     committees are concerned that some agencies have attempted to 
     circumvent notice-and-comment requirements by trying to give 
     legal effect to general statements of policy, ``guidelines,'' 
     and agency policy and procedure manuals. The committees 
     admonish the agencies that the APA's broad definition of 
     ``rule'' was adopted by the authors of this legislation to 
     discourage circumvention of the requirements of chapter 8.
       The definition of a rule in subsection 551(4) covers most 
     agency statements of general applicability and future effect. 
     Subsection 804(3)(A) excludes ``any rule of particular 
     applicability, including a rule that approves or prescribes 
     rates, wages, prices, services, or allowances therefore, 
     corporate and financial structures, reorganizations, mergers, 
     or acquisitions thereof, or accounting practices or 
     disclosures bearing on any of the foregoing'' from the 
     definition of a rule. Many agencies, including the Treasury, 
     Justice, and Commerce Departments, issue letter rulings or 
     other opinion letters to individuals who request a 
     specific ruling on the facts of their situation. These 
     letter rulings are sometimes published and relied upon by 
     other people in similar situations, but the agency is not 
     bound by the earlier rulings even on facts that are 
     analogous. Thus, such letter rulings or opinion letters do 
     not fall within the definition of a rule within the 
     meaning of subsection 804(3).
       The different types of rules issued pursuant to the 
     internal revenue laws of the United States are good examples 
     of the distinction between rules of general and particular 
     applicability. IRS private letter rulings and Customs Service 
     letter rulings are classic examples of rules of particular 
     applicability, notwithstanding that they may be cited as 
     authority in transactions involving the same circumstances. 
     Examples of substantive and interpretative rules of general 
     applicability will include most temporary and final Treasury 
     regulations issued pursuant to notice-and-comment rulemaking 
     procedures, and most revenue rulings, revenue procedures, IRS 
     notices, and IRS announcements. It does not matter that these 
     later types of rules are issued without notice-and-comment 
     rulemaking procedures or that they are accorded less 
     deference by the courts than notice-and-comment rules. In 
     fact, revenue rulings have been described by the courts as 
     the ``classic example of an interpretative rul[e]'' within 
     the meaning of the APA. See Wing v. Commissioner, 81 T.C. 17, 
     26 (1983). The test is whether such rules announce a general 
     statement of policy or an interpretation of law of general 
     applicability.
       Most rules or other agency actions that grant an approval, 
     license, registration, or similar authority to a particular 
     person or particular entities, or grant or recognize an 
     exemption or relieve a restriction for a particular person or 
     particular entities, or permit new or improved applications 
     of technology for a particular person or particular entities, 
     or allow the manufacture, distribution, sale, or use of a 
     substance or product are exempted under subsection 804(3)(A) 
     from the definition of a rule. This is probably the largest 
     category of agency actions excluded from the definition of a 
     rule. Examples include import and export licenses, individual

[[Page E579]]

     rate and tariff approvals, wetlands permits, grazing permits, 
     plant licenses or permits, drug and medical device approvals, 
     new source review permits, hunting and fishing take limits, 
     incidental take permits and habitat conservation plans, 
     broadcast licenses, and product approvals, including 
     approvals that set forth the conditions under which a product 
     may be distributed.
       Subsection 804(3)(B) excludes ``any rule relating to agency 
     management or personnel'' from the definition of a rule. 
     Pursuant to subsection 804(3)(C), however, a ``rule of agency 
     organization, procedure, or practice,'' is only excluded if 
     it ``does not substantially affect the rights or obligations 
     of non-agency parties.'' The committees' intent in these 
     subsections is to exclude matters of purely internal agency 
     management and organization, but to include matters that 
     substantially affect the rights or obligations of outside 
     parties. The essential focus of this inquiry is not on the 
     type of rule but on its effect on the rights or obligations 
     of non-agency parties.

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