U.S. Treasury Seal
GENERAL COUNSEL
         DEPARTMENT OF THE TREASURY
                                 WASHINGTON, D.C.


                                      June 24, 1998

The Honorable Stephen Horn
Chairman
Subcommittee on Government Management, Information, and Technology
Committee on Government Reform and Oversight
U.S. House of Representatives
Washington, D.C. 20515-6050

Dear Mr. Chairman:

This letter presents the views of the Department of the Treasury on H.R. 2124, "To require Federal agencies to assess the impact of policies and regulations on families, and for other purposes." The Department of the Treasury strongly opposes enactment of H.R. 2124. Although well intentioned, as drafted this legislation is ill conceived and virtually impossible to implement in any reasonable manner.

The bill would require that before an agency could implement a policy or regulation that "may affect family well-being," the agency must conduct a family impact assessment. After making the assessment, the agency would be required to certify in writing to the Office of Management and Budget (OMB) that the assessment had been conducted and to prepare an "adequate rationale for implementation of each policy or regulation that may negatively affect family well being." OMB would be responsible for ensuring that agency policies and regulations were implemented consistent with the bill and for reporting annually to Congress concerning agency certifications. The bill also would require an agency to conduct a family impact assessment upon the request of any member of Congress.

The Department is unaware of a need for this legislation. In general, agency rules interpret and apply the law as enacted by the Congress. These laws reflect legislative policy decisions made concerning many competing interests, including those affecting the family. For example, when the Congress defined the term "dependent" for purposes of the Internal Revenue Code, the Congress decided who is a dependent -- and therefore a family member -- for tax purposes. IRS rules applying the congressional definition merely interpret the law and any effects on the family flow not from the regulation but from the law.

If the Congress believes that an agency has incorrectly interpreted or applied a law in a manner that adversely affects families, or that a provision of law is having unintended consequences on families, it already has ample remedies available. For example, utilizing the fast track authorities in chapter 8 of title 5, United States Code (as enacted by the Small Business Regulatory Enforcement Fairness Act of 1996), the Congress can repeal an agency rule or prevent it from becoming effective. Similarly, the Congress can exercise its power to preclude an agency from expending funds to enforce or implement a particular provision of law if the Congress determines that it is having unintended consequences on the family or otherwise.

We are also concerned that the scope of the bill is extremely broad and undefined. Although the bill would require assessments of each "policy or regulation that may affect family well-being," the terms "policy" and "regulation" are not defined by the bill or any other law. The bill does not define what constitutes the "well-being" of a family, a term that could have different meanings in different contexts. The bill is unclear whether an assessment is required if a policy or regulation affects a few families or a limited category of families. In this regard we note that the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires agencies to analyze proposed and final rules that have a "significant economic impact on a substantial number" of small businesses, and that other analyses are required when the costs or benefits of a regulatory action exceed a specified dollar threshold (see section 202 of the Unfunded Mandates Reform Act of 1995 and section 3(f) of Executive Order 12866). It also is unclear whether an agency is required to conduct an assessment of an agency policy or regulation that enhances family well-being.

The bill makes no provision for waiving the family impact assessment in appropriate circumstances. For example, Treasury's Office of Foreign Assets Control is responsible for quickly implementing by regulation the President's determinations to impose economic or other sanctions on foreign governments. Such determinations may preclude a broad range of transactions, including the transfer of funds to persons in the target country, a prohibition on exports, imports and other commercial transactions, and travel restrictions. It would appear that such regulations would be subject to the family assessment required by the bill because they would affect the well-being of families in the target country. We strongly believe such a result is inappropriate.

The bill would require that a family assessment address the seven items set forth in section 3. Agencies would not be able to address many of these items without additional guidance. For example, it is unlikely that agencies would be able to assess whether an action "strengthens or erodes the authority and rights of parents in the education, nurture, and supervision of their children" or "helps a family perform its functions" without a fundamental definitional structure. Moreover, even with definitions, many agencies have neither the information nor the expertise to evaluate the criteria set forth in section 3. The bill is unclear concerning the extent to which an agency must take into account indirect (secondary, tertiary, etc., effects) when assessing the impact of a regulation or policy. In addition, a policy or regulation may have different effects on families in different circumstances. For example, a rule that addresses the timing of income and deduction on interest paid and received will affect families who are borrowers differently from families who are creditors. It is entirely unclear how the Department could assess the effect on family stability of interest received and interest paid or evaluate the combined effect across all taxpayer families.

The Department is seriously concerned that the bill would subject agency regulations to unnecessary litigation over whether an agency was required to prepare a family impact assessment because a proposed rule "may affect family well-being," whether the assessment was properly conducted, and whether the agency prepared an "adequate rationale" for implementing a rule that "may negatively affect family well-being." Notwithstanding our strong opposition to this legislation, we recommend that it be amended to preclude any judicial review of agency compliance with its provisions.

Although we defer to the Department of Justice concerning whether section 5 of the bill violates the Constitution's separation of powers principles, we have grave concerns about this provision. By authorizing individual Senators and Representatives to compel an agency to conduct an assessment of a proposed policy or regulation, the legislation appears to impermissibly authorize the Congress to interfere with Executive branch functions.

The Office of Management and Budget has advised that there is no objection from the standpoint of the Administration's program to the submission of this report to your Committee.