On June 26, Reps. Sue Kelly (R-NY) and David McIntosh (R-IN) introduced the "Truth in Regulating Act of 2000" (H.R. 4744), which seeks to establish an office within GAO to conduct cost-benefit analysis of agency rules at the request of Congress. This legislation is vastly different from the Senate version (S. 1198), which passed by unanimous consent, and contains many of the problems S. 1198 sought to avoid. Specifically: 1. It requires that GAO conduct its own cost-benefit analysis. Cost-benefit analyses are extremely time-consuming, require significant expertise, and are done within the context of each rulemaking. Yet H.R. 4744 requires that GAO finish its analysis within 180 days for final rules, and 60 days — or the end of the public comment period, whichever is later — for proposed or interim final rules. The Senate bill, by contrast, only asks GAO to conduct "an evaluation of the agency's analysis" to examine "underlying assessments and assumptions" (and allows 180 days for analysis of proposed rules, as it does for final rules). This is more realistic and fits much more naturally with GAO's skill, which is in auditing agency activity, not in developing regulation. Requiring GAO to conduct its own cost-benefit analysis, as H.R. 4744 does, is clearly unworkable, especially considering that the bill authorizes only $5.2 million to fund the office. According to the Congressional Budget Office, it costs an average of $570,000 to conduct a cost-benefit analysis. It's unclear how many cost-benefit analyses GAO would conduct each year. But taking CBO's estimate into consideration, if GAO were to do a cost-benefit analysis for each of the 75 economically significant rules in 1998, the GAO's office would cost about $43 million for the year. Without proper funding, it would be impossible for GAO to do reliable, credible analysis. Even with full funding, however, serious credibility problems remain. Without being a part of the rulemaking (e.g., without being involved in the agency's public comment period, SBREFA panels, etc.), it would be impossible for GAO to make a reliable, independent estimate at both cost and benefits. GAO could essentially copy agency findings, but if that's the case, the bill does not meet its apparent purpose. More likely, the limited time-frame would force GAO to rely very heavily on estimates from regulated interests. Under this scenario, however, the proponents would lose the independence they say they want — which would be especially troubling if Congress intends to use information generated by GAO as a basis for rejecting agency rules under the Congressional Review Act (CRA). Some of the language in H.R. 4744 is somewhat ambiguous. The proponents may claim that it does not actually require GAO to conduct cost-benefit analysis. But if that's the case, then why not go with language from the Senate version that is decidedly unambiguous? Clearly, the sponsors of H.R. 4744 have something more in mind. 2. It requires GAO to assess regulatory alternatives using new criteria — not required of the agencies — that slant analysis to the cost side of the equation. H.R. 4744 requires GAO to conduct an analysis "of any alternative regulatory approaches that could achieve the same goal in a more cost-effective manner or that could provide greater net benefits..." Currently, agencies are not required to develop rules on the basis of a cost-effectiveness test, and in many cases, they are statutorily prohibited from doing so because of the seriousness of the health, safety, or environmental risks involved. Such a test inevitably leads to less protective standards. GAO should not be charged with evaluating rules on the basis of a standard that Congress has found, in many cases, to be inappropriate. This provision was removed from the Senate version for that reason. 3. It puts GAO in the position of weighing outside analysis. Not only would GAO have to review the agency's work, it would also have to review the "public's data, methodology, and assumptions used in developing the economically significant rule. What constitutes "the public" is left undefined. Presumably, it would at least include those who submit comments to the agency. But considering that controversial rules often generate hundreds of comment letters from a wide variety of perspectives, this would be an extremely time-consuming task — and given the limited time GAO is given to generate its report, likely impossible. Nonetheless, this would put GAO in the position of weighing outside analysis (including self- serving analysis generated by affected industry) — in search of a "more cost effective" approach — that the agency has already reviewed and rejected. GAO would simply not have the time or the expertise to do its own credible, independent assessment of the "public's data." 4. It contains no language requiring accountability to the public. H.R. 4744 raises serious concerns involving the Administrative Procedure Act (APA). Agencies are required by the APA to take a number of steps (e.g., public notice and comment) to ensure openness. Under H.R. 4744, GAO would have to conduct cost-benefit analyses just like federal agencies, but unlike federal agencies would not be bound to the APA. This means important decisions at GAO that could lead to the defeat of health, safety, or environmental protections might be made without any input from the public. Moreover, agencies can be sued under the APA if an agency decision is "arbitrary or capricious," providing important checks and balances. Yet under H.R. 4744, the public would have no recourse in court for sloppy work produced by GAO. 5. It does not grant agencies the opportunity to comment on GAO's conclusions. Under the bill, GAO could call into question an agency's decision-making, and possibly recommend alternative approaches. Yet the bill — as is also the case with the Senate version — does not explicitly grant the agency an opportunity to respond. The bill should include a provision granting agencies time to respond to GAO's analysis, and this response should be included in GAO's final report delivered to Congress. This would allow members a more complete picture of any issues that might be in dispute. 6. It raises Constitutional concerns over separation of powers. H.R. 4744 moves GAO in the direction of subordinating the powers granted to the executive branch to execute the laws of the land. Congress has every right to establish laws and revise them, but H.R. 4744 would place the legislative branch in the role of describing regulatory alternatives for the way the executive branch is to execute. This problem is further exacerbated by the fact that GAO would be required to inject itself during a proposed rulemaking, before the agency has finished its work. Congress should avoid this situation by limiting GAO's work to final rules. 7. It potentially allows for GAO analysis of nonmajor rules. The Senate version limits GAO's analysis to major rules — that is rules with an impact on the economy of $100 million or more, or otherwise have an adverse effect on the economy. H.R. 4744 opens the door for nonmajor rules that fall under the Regulatory Flexibility Act (in other words, rules that have a "significant" impact on small business). Agencies do not conduct cost-benefit analysis for nonmajor rules. Thus, GAO would need to conduct its own cost-benefit analysis from scratch for such rules.