White House revises regulatory review to account for equity, seeks public feedback

The White House is undertaking major updates to regulatory review policies and guidance in a bid to make the process more equitable and inclusive under a new executive order signed by President Joe Biden today.

The EO issued today follows up on a presidential memorandum Biden signed on his first day in office on “Modernizing Regulatory Review.” The latest directive aims to fold more considerations for underserved communities into the regulatory review process, and make changes to how agencies measure the cost-benefit analysis of their actions.

The EO raises the threshold for regulations that require a “rigorous cost-benefit analysis” from $100 million to $200 million in annual effects on the economy. The White House’s Council of Economic Advisors estimates the threshold change would have reduced the number of required regulatory impact analyses by 20% in recent years.

It also aims to reduce the number of regulatory actions brought into Office of Information and Regulatory Affairs (OIRA) for review by setting a higher bar for regulations that do require interagency review.

OIRA Administrator Richard Revesz, in a blog post published today, contended the EO and corresponding changes to regulatory guidance “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.”

Large parts of the regulatory processes haven’t changed since the 1990s, he continued, despite “substantial advances in scientific and economic knowledge.” The changes will also help “return the number of regulations subject to more rigorous review to levels consistent with earlier administrations,” Revesz added.

As part of the effort, the White House Office of Management and Budget is also proposing changes to its regulatory analysis guidance, known as Circular A-4, which was issued in 2003. The EO calls for the changes to be instituted within one year.

OMB is proposing to update Circular A-4 to account for changes in interest rates, and to provide more guidance to agencies on “distributional analyses” that better takes into account the effect of a benefit on different income levels.

“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,” Revesz wrote in the blog post. “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.”

OMB is additionally proposing changes to Circular A-94, the guidance to agencies on spending federal grant money.

“These proposed revisions will help better target federal funds for crucial projects by updating for decades of scientific and economic advances and knowledge,” Revesz wrote. “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.”

Promoting ‘public participation’

The Biden administration is also encouraging more public participation in the regulatory process. The EO calls for public comment and participation processes to  promote more equitable, meaningful participation across stakeholders, including in underserved communities.

In a memo to regulatory policy officers at agencies, Revesz also explains the revisions in more detail, including actions they can take to promote “inclusive regulatory policy and public participation.”

In addition to hosting public meetings and providing context to proposed regulations, Revesz’s memo suggest “including easy-to-understand language and analysis in the regulatory action that informs interested or affected members of the public of the expected effects of the regulatory
action that may impact them.”

OIRA is further encouraging the use of “online and alternative platforms and media” to reach communities, as well as ensuring stakeholder engagement approaches account for providing access to people with disabilities.

Additionally, OIRA recommends developing “plain-language guides” and expanding the use of public engagement tools, such as requests for information, early on in the regulatory planning process.

Jason Furman, who was chair of the Council of Economic Advisors under President Obama, said the Biden administration has done a “thoughtful job” with its efforts to modernize the regulatory process.

“The Office of Management and Budget is launching a thoughtful and long-overdue overhaul of Circulars A-4 and A-94 that bring them into the modern age, moving them in line with economic thinking over the last several decades along with the changes in interest rates over that period,” Furman said. “They will ensure the government can do a better job both with regulation and public investment, appropriately taking into account future benefits and the risks associated with them.”

John Graham, who served as OIRA administrator under the former President George W. Bush, said he was encouraged by the effort to modernize the regulatory process and called the changes “a reaffirmation by the Biden administration of the importance of benefit-cost analysis in the regulatory process.”

“OIRA has also made some serious, ambitious and thoughtful proposals to improve the practice of benefit-cost analysis,” Graham told Federal News Network. “The biggest technical changes relate to how future benefits and costs are expressed in present value and how impacts on low-income Americans are weighed in the analysis.”

But one challenge, Graham noted, is that the new OIRA guidance on distributional equity “will require new data collection by federal agencies as well as training of agency staff and contractors on how to undertake equity-weighted analyses.”

Revesz’s memo to agencies explain how the new EO’s proposed revisions address how agencies should analyze the “distributional effects” of regulatory actions.

“As part of their effort to account for equity in regulatory actions, agencies should consider which
populations, including underserved communities, might be affected by regulatory actions, and
what barriers those communities face to benefitting from those regulatory actions,” he wrote.

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