Biden Administration Changes White House Regulatory Review
Time 5 Minute Read
Categories: General, Policy

On April 6, 2023, President Biden issued Executive Order 14094, Modernizing Regulatory Review. This Executive Order (EO) makes several important changes to the Office of Management and Budget’s (OMB) regulatory review process for federal agency regulations. The EO significantly affects which regulations qualify for interagency review, modifies the OMB gatekeeping function by which meetings are granted on proposed rules, and requires the Office of Information and Regulatory Affairs’ (OIRA) to amend policies underlying how the federal government conducts cost-benefit analysis. In addition, OIRA has released a suite of new draft guidance documents that serve to implement the EO that, if finalized, will impact the review process for regulations. These guidance documents are open for comment as described below.

New thresholds for initiating interagency review

Decades ago, EO 12866 defined a “significant regulatory action” as one that would have an annual effect of $100 million or more on the US economy and subjected such actions to mandatory formal “interagency review” overseen by OIRA. EO 14094, however, doubles this cost threshold, to capture only proposed regulations with at least $200 million per year of impact. EO 14094 also makes additional changes to this key definition which also allows discretionary review for rules that are below the monetary threshold. EO 14094 omits the 12866 language about “novel legal or policy issues arising out of legal mandates” and instead covers only “legal or policy issues for which centralized review would meaningfully further the President’s priorities.” Notably, determinations of significant regulatory actions in this latter category must be made by the Administrator of OIRA in each case, instead of staff as was the previous practice. These changes make it likely that fewer rules will undergo the interagency review process.

Changes to promote inclusive regulatory policy and public participation

EO 14094 also requires OMB to reform the process for meetings with OIRA on proposed rules (i.e., 12866 meetings) and the topics discussed at such meetings. To begin implementing these reforms, OMB issued a Federal Register notice and draft guidance. OIRA requests comment on how it can: (1) facilitate 12866 meeting requests to ensure access for those whom have not historically participated in that process; (2) encourage joint meeting requests for groups that would like to present similar views on a regulatory actions; (3) discourage meeting requests that are duplicative of earlier meetings with OIRA; and (4) increase transparency about which groups are granted 12866 meetings and the subject matter and materials discussed.

To assist with the implementation of the new Executive Order, OIRA Administrator Richard Revesz published a memorandum that provides additional context for the regulated community on what to expect from OIRA in relation to meeting requirements for, at a minimum, the next several years. The memorandum answers some “frequently asked questions” on EO 14094 and also provides additional context on at least a dozen other topics related to OIRA’s actions. EO 12866 meetings are an important step in the administrative policymaking process, and those without such meetings will have less of an opportunity to represent their concerns before OIRA. Comments on the draft guidance are due to OMB by June 6, 2023.

Changes to Circular A-4, the blueprint for federal regulatory analysis

EO 14094 calls on OMB to issue revisions to Circular A-4 within one year to ensure that regulatory analysis recognizes “distributive impacts and equity.” To meet this goal, concurrent with the release of EO 14094, OMB issued the preamble to proposed circular A-4 and proposed Circular A-4. Circular A-4 represents OMB’s “best practices” for conducting regulatory analysis (also known as benefit-cost or cost-benefit analysis). Circular A-4 was last updated in 2003. Among the many revisions in the proposed circular are important updates to how federal agencies quantify benefits and costs for regulatory actions.

OIRA proposes to replace traditional discount rates of 3 percent and 7 percent with a discount rate of 1.7 percent. For longer time horizons in “significant regulatory actions,” additional lower discount rates are discussed in the preamble. Alternative discount rates can be used in rulemakings’ “sensitivity analyses.” When considering distributional impacts, the proposed Circular A-4 encourages agencies to evaluate distributional effects instead of directing agencies to simply maximize net benefits without considering how a regulation may differentially impact different income groups. 

While technical, these proposed changes are important because they affect how costs and benefits are weighed when agencies conduct economic analyses of “significant regulatory actions.” OIRA has requested nominations of experts to peer review this draft guidance by April 28, 2023, and comments on the proposed Circular A-4 are due by June 6, 2023.

Changes to Circular A-94

OMB is also proposing revisions to Circular A-94. Last updated in 1992, Circular A-94 affects how agencies’ federal grant money is spent each year by providing guidance on how to conduct benefit-cost and cost-effectiveness analyses of federal activities. The proposed changes to Circular A-94 are consistent with the proposed changes to Circular A-4 and are meant to ensure that federal funds have the greatest possible impact. Comments on this proposal must be submitted by June 6, 2023.

The Administrative Law Group at Hunton Andrews Kurth LLP has decades of experience participating in the interagency review process and ensuring that agencies conduct appropriate and robust benefit-cost analyses. The team stands ready to assist those interested in learning more about the impactful changes described above and/or providing comments on the suite of OIRA actions.

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