Biden's Regulatory Update is Finally Here

The regulatory process is finally getting the much anticipated update that President Biden called for when he took office over two years ago. 

On Thursday, Biden signed an executive order to improve the effectiveness of the regulatory review process and regulatory analysis, which implements his Day One memo.

“Parts of the federal regulatory review process haven’t been updated since the 1990s, and since then we’ve seen substantial advances in scientific and economic knowledge,” wrote Richard Revesz, administrator of the Office of Information and Regulatory Affairs, in a blog post. “These new steps will produce a more efficient, effective regulatory review process that will help improve peoples’ lives—from protecting children from harmful toxins and lowering everyday costs for families, to improving rail safety and growing our economy from the middle out and bottom up.”

The executive order increases the threshold for rigorous regulatory cost-benefit analysis from $100 million to $200 million in annual effects and says that this amount must be adjusted for GDP growth every three years. This will “focus OIRA and agency resources where they are most beneficial,” Revesz said. It will also “help return the number of regulations subject to more rigorous review to levels consistent with earlier administrations.” 

Next, the executive order “clarifies that if a regulation does not require a rigorous benefit-cost analysis, does not create a serious inconsistency with other agency actions, and does not have material budgetary impacts, the regulation will only undergo interagency review [as outlined in a 1993 executive order] if the administrator of OIRA specifically authorizes review because it would meaningfully further the president’s priorities or the principles,” said an administration official. “This is expected to reduce the number of regulatory actions brought in for OIRA review.”

The order overall “supplements and reaffirms” the principles on regulatory review outlined in executive orders issued in 1993 and 2011. Specifically, it strives to increase the public’s participation in the regulatory review process (something OIRA has also already been working on) and lays out reforms to decrease “the risk or appearance of disparate and undue influence” in the OIRA review process, the text of the order reads. OIRA released draft guidance on implementation of that provision. 

Lastly, the executive order also directs the Office of Management and Budget, which houses OIRA, and OIRA to update within a year Circular A-4, which was issued in 2003 and provides agencies guidance on regulatory cost-benefit analysis. In order to kick off that process, the White House released proposed changes that will be open for public comment. 

“Among other things, the proposed revisions aim to help agencies better account for the value of future regulatory effects and provide the greatest benefits for the American people,” wrote Revesz. “Specifically, the revision updates the discount rate that translates future costs and benefits into present-day values, provides greater support for analyzing distributional effects, and provides more thorough guidance for accounting for risk and uncertainty.”

John Graham, a former OIRA administrator under President George W. Bush, said that “a theme of the proposed changes is more attention to fairness and equity in the conduct of benefit-cost analysis.”

Sally Katzen, former OIRA administrator under President Clinton, said “the documents are faithful to the president’s request.” 

Finally, OMB is proposing revisions to Circular A-94, which was last revised in 1992 and provides guidelines on how federal grant money is spent every year. Presidential administrations and OIRA “have made an effort to kind of align” priorities in the A-4 and A-94 circulars, Graham said. 

The proposed updates will better target federal funds for projects by taking into account “decades of scientific and economic advances and knowledge,” Revesz said. “The proposed revisions will help ensure that federal funds have the greatest possible impact, whether they provide for building levees to protect communities or transportation infrastructure to connect Americans.” 

During his confirmation hearing Revesz said, “I’m a strong supporter of the use of cost benefit analysis to evaluate regulations.” He told senators he’s a fan of “evidence-based decision making” and doesn’t think cost-benefit analysis should be a Democratic or Republican practice, but rather used “in a fair and even-handed way.” The Biden administration went much longer without a confirmed OIRA head than recent predecessors, as Revesz was not confirmed until this past December, nearly two years after the president took office.

Since Biden issued the memo, the Supreme Court has issued a decision severely restricting the Environmental Protection Agency’s powers to regulate greenhouse gasses and fight climate change as well as establishing the “major questions doctrine,” which could set precedent that federal agencies have little flexibility to create new regulations with major economic or political significance that rely on authorities not clearly spelled out in the law.