President Joe Biden instructed the Director of the Office of Management and Budget ("OMB") to improve and modernize the regulatory review process and to produce recommendations for "ensur[ing] swift and effective Federal action." In a memorandum, President Biden "reaffirm[ed] the basic principles set forth in" Executive Orders ("EOs") 12866 ("Regulatory Planning and Review") and 13563 ("Improving Regulation and Regulatory Review"). President Biden explained that the intention behind these recommendations should be to "promote public health and safety, economic growth, social welfare, racial justice, environmental stewardship, human dignity, equity, and the interests of future generations."
President Biden requested that the recommendations:
- identify avenues for "moderniz[ing] and improv[ing]" the regulatory review process through updates to the OMB's Circular A-4, Regulatory Analysis, in order to guarantee that the review process (i) advocates for policies that are representative of "new developments in scientific and economic understanding," (ii) takes into account regulatory benefits that are "difficult or impossible to quantify" and (iii) "does not have harmful anti-regulatory or deregulatory effects";
- include procedures that account for the "distributional consequences" of regulations (i.e., ensure that regulations do not burden disadvantaged communities);
- evaluate methods with which the Office of Information and Regulatory Affairs (or "OIRA") can more proactively undertake regulatory initiatives in partnerships with Federal agencies; and
- identify methods of promoting an efficient, transparent and inclusive interagency review process, including appropriate processes for the review of guidance documents.
Commentary Steven Lofchie
On a theoretical level, there are very good arguments that cost-benefit analysis is a very imperfect tool. See, e.g., Cost-Benefit Analysis of Financial Regulation - Case Studies and Implications.
On a more practical level, this memorandum may be a means to eliminate cost-benefit analysis as an impediment to rulemaking. For example, the regulators are given freedom to quantify "regulatory benefits" that the memorandum concedes are "impossible to quantify." These benefits may include, e.g., "human dignity." Who among the regulators will decide what constitutes human dignity and how it is to be valued? It is not that decisions as to such matters are not inherently part of the governmental task, but are generally viewed as legislative, not regulatory, tasks, and it is not clear on what basis the regulators will "quantify" them.
The memorandum describes itself as being largely governed by EO 12866, and thus implies it is a continuation of long-existing governmental policy. One could also make the argument that the memorandum is a complete reversal of EO 12866. EO 12866 states that "Federal agencies should promulgate only such regulations as are required by law, are necessary to interpret the law, or are made necessary by compelling public need. . . ." In other words, the fundamental policy underlying EO 12866 was to minimize government intrusion.
By contrast, the new memorandum may serve to do the opposite, i.e., to remove any impediments to "ensuring swift and effective Federal action."
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