Five agencies issued the bulk of the final rules published during this period-the Departments of Agriculture (USDA), Commerce (DOC), Health and Human Services (HHS), and Transportation (DOT); and the Environmental Protection Agency (EPA). As figure 2 shows, these agencies varied substantially in the degree to which they mentioned the executive order. For example, DOT mentioned the order in nearly 60 percent of its nearly 4,000 final rules, whereas EPA did not mention the order in any of the more than 1,900 rules it issued.

However, that does not appear to have been the case. As figure 3 shows, of
the 117 major final rules issued by covered agencies between April 1996
and December 1998, the preambles indicated that only 1 had a federalism
assessment. The agencies had previously indicated that 37 of these rules
would affect state and local governments, and the preambles to 21 of the
rules indicated that they would preempt state and local laws in the event of
a conflict. At least one of the four state and local government organizations
that we consulted during the review said that federal agencies should have
done assessments for most of these 117 major rules. In response, the
agencies said that their rules did not have sufficient federalism
implications to trigger the executive order's requirements.

EPA Established High Threshold for Federalism Assessments

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

All three of the agencies we visited during our review (USDA, HHS, and EPA) had some kind of written guidance on the executive order and had designated an official or office responsible for ensuring its implementation.' However, the criteria the agencies used to determine whether federalism assessments were needed varied among the agencies. USDA's guidance did not establish any specific criteria, with agency attorneys making their own determinations regarding federalism implications in the context of each rulemaking. HHS' guidance listed four threshold criteria that could be used to determine whether a federalism assessment was required, but said an assessment must be prepared if an action would directly create significant effects on states even if the action was mandated by law or the department otherwise had no discretion.

Statement

Federaliam: Comments on 5. 1214-The Federalism Accountability Act of 1999

OMB Has Taken Little Recent
Action to Ensure
Implementation of Executive
Order 12612

The criteria in EPA's guidance established a high threshold for what constitutes "sufficient" federalism implications-perhaps explaining why none of the agency's more than 1,900 final rules issued during the April 1996 to December 1998 time frame had a federalism assessment, For example, in order for an EPA rule to require an assessment, the agency's guidance said the rule must meet all four of the following criteria:

⚫ have an "institutional" effect on the states, not just a financial effect
(regardless of magnitude);

• change significantly the relative roles of federal and state governments in a
particular program context, lead to federal control over traditional state
responsibilities, or decrease the ability of states to make policy decisions
with respect to their own functions;

⚫ affect all or most of the states; and

⚫ have a direct, causal effect on the states (i.e., not a side effect).

At least one of these criteria appeared to go beyond the executive order on
which it is based. Although EPA said a rule must affect all or most of the
states in order to have sufficient federalism implications to warrant
preparation of an assessment, Executive Order 12612 defines "state" to
"refer to the States of the United States of America, individually or
collectively." (Emphasis added.) EPA's guidance also said that, even if all
four of these criteria are met, a rule would not require a federalism
assessment if a statute mandates the action or the means to carry it out are
implied by statute. However, EPA's actions appear to be allowable because
the executive order does not define what is meant by "sufficient"
federalism implications, leaving that determination up to the agencies.

OMB officials told us that they had taken little specific action to ensure implementation of the executive order, but said the order is considered along with other requirements as part of the regulatory review process under Executive Order 12866. They said that agencies had rarely submitted separate federalism assessments to OMB but have addressed federalism considerations, when appropriate, as a part of the cost-benefit analysis and other analytical requirements.

Commenting on the results of our review, the Acting Administrator of OMB's Office of Information and Regulatory Affairs said it was not surprising that agencies were not focused on implementing Executive Order 12612 during the covered time period because they knew that the order was soon to be revised by Executive Order 13083. However, he also said that Executive Order 12612 had not been implemented to any significant extent by the Reagan Administration "or its successors,"