On April 6, 2023, President Joe Biden signed an executive order (EO), “Modernizing Regulatory Review,” amending President Bill Clinton’s EO 12866, which has served as the foundation for regulatory review and analysis across administrations for nearly 30 years. The following day, the White House Office of Management and Budget (OMB) issued several related actions. These included proposed revisions to guidelines for benefit-cost analysis and processes for public participation in the regulatory review process.
Collectively, these reforms are expected to result in less scrutiny and decreased control by the White House of federal agencies’ regulatory actions as well as new analytical tools for conducting benefit-cost analyses and new processes for public engagement. Interested parties, including those that have long participated in the regulatory process, should take note of the proposed changes and consider submitting comments to OMB by the June 6, 2023 deadline.
At a high level, President Biden’s amendments to EO 12866 include
- increasing the threshold for defining “economically significant” regulations, which are subject to cost-benefit analysis requirements, from $100 million to $200 million (and adjusted every three years to account for gross domestic product changes)
- requiring the OMB Office of Information and Regulatory Affairs (OIRA) Administrator to approve “economically significant” regulation designations
- requiring federal agencies to clarify opportunities for interested parties to petition for the issuance, amendment, or repeal of a rule and to maintain an inventory of and efficiently respond to such petitions
- directing OIRA and federal agencies to engage underrepresented communities during rulemaking processes, including development of the semiannual regulatory agenda and annual regulatory plan
- directing OMB to collaborate with relevant departments, including the Council of Economic Advisors, and finalize revisions to Circular A-4, which provides guidance to federal agencies on the development and regulatory analysis, within one year
OMB, for its part, announced the following:
- a notice requesting public comments on proposed revisions to Circular A-4 for public notice and comment. In the accompanying preamble to the proposed revisions, OMB highlighted revisions regarding the scope of any regulatory analysis to be conducted, the development of analytical baselines (i.e., the world without the regulation), development of cost and benefit estimates, and consideration of varied approaches to nationwide actions to account for distributional effects, such as varying effects based on geography, occupation, or race. In a separate notice, OMB requested nominations of experts to participate in an independent scientific peer review of the revised Circular A-4 with nominations due April 28, 2023.
- a notice requesting public comment on proposed revisions to Circular A-94, which provides guidance on benefit-cost analysis and cost-effective analysis of federal spending. Last revised in 1992, OMB proposes to provide new guidance for discounting estimates of costs and benefits of federal programs.
- a notice requesting public comments on Draft EO 12866 Meetings Guidance implementing Section 2(e) of President Biden’s new EO. In particular, OMB proposed reforms to the EO 12866 stakeholder meeting process, which are meetings held between OIRA staff and the public during OIRA’s review of significant regulatory actions. OIRA already maintains a public webpage with information on EO 12866 stakeholder meetings, including meeting attendees and materials presented. OMB is now considering reforms such as (i) discouraging duplicative meeting requests, (ii) encouraging joint meeting requests wherever possible, and (iii) disclosing information about EO 12866 meetings in an “open, machine-readable and accessible format.”
Comments on all three OMB proposals are due by June 6, 2023.
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