Even before President Joe Biden’s long-anticipated revisions to how agencies calculate their regulations’ costs and benefits came out this week, they were under threat.
On Wednesday afternoon, Republican lawmakers on Capitol Hill moved an amendment that would bar the Biden administration’s proposed changes to Circular No. A-4, the governmentwide guidance on regulatory analysis that had gone untouched for decades. By Thursday morning, the White House issued their final version to acclaim from progressive allies.
And while the GOP amendment’s vehicle, the Financial Services and General Government appropriations bill, has been pulled from the House floor, its inclusion in the legislation shows the president’s attempt to refashion rulemaking has a tough road ahead. Critics believe the effort won’t last beyond this administration.
“The previous circular lasted 20 years through three very different administrations because it was grounded in widely accepted principles,” Susan Dudley, who led the Office of Information and Regulatory Affairs during the George W. Bush administration, told E&E News. “I do not think this version will prove as durable.”
James Goodwin, a senior policy analyst at the Center for Progressive Reform, a liberal-leaning regulatory think tank, sees hazards ahead for the revised regulatory guidance, whether it’s a Republican-sponsored appropriations rider or a conservative-led court challenge.
“This could be challenged in the court under the major questions doctrine,” Goodwin said. “It would take a Looney Tunes judge in Texas or Louisiana to accept that judgment. but yeah, we have Looney Tunes judges in Texas or Louisiana.”
Goodwin added Congress could also attempt a Congressional Review Act resolution to overturn the regulatory guidance revisions because the package qualifies as a rule.
“Biden is not going to sign that, but it gives them a platform,” he said.
‘Justifications for regulations’
The administration’s revisions to Circular No. A-4, first proposed in April, are a capstone on what has been a busy year on the regulatory front for Biden.
The Office of Information and Regulatory Affairs, under Administrator Richard Revesz, has issued separate guidance documents to broaden public participation in rulemaking as well as consider benefits to ecosystems and boost competition. The office also has sought to reduce paperwork burdens for the public when dealing with government programs.
The regulatory guidance revisions, however, are OIRA’s most ambitious project yet. They will help agencies writing regulations to give greater weight to benefits like reducing pollution as well as accounting for disadvantaged communities and future generations.
“Within this larger effort, revising Circular A-4 is particularly significant because it covers an array of important topics — the valuation of future consequences, the distribution of a policy’s effects, the scope of effects to analyze, and the best way to account for effects that are difficult to monetize — that are at the core of determining the benefits and costs of regulations,” said a blog post in the Office of Management and Budget’s briefing room Thursday.
Goodwin said the revised regulatory guidance starts to untether cost-benefit analysis from conventional economics.
“It gave more room to consider noneconomic justifications for regulations, such as advancing racial equity. It recognized that there weren’t just practical limits to monetization,” Goodwin said. “This is a big deal, because it allows for a more open and honest discussion of rules and the impacts they have on our society.”
Amit Narang, a regulatory policy consultant working with Public Citizen and the Coalition for Sensible Safeguards, said in a statement, “For decades, agencies have used deeply flawed methods for assessing the costs and benefits of new regulations, which downplay the benefits to consumers, workers, public health, public safety, and the environment while exaggerating the costs to corporations.”
Narang added, “With these reforms, agencies will now do a far better job accounting for the very real benefits regulations have for everyday Americans, even if they are difficult or impossible to quantify.”
The administration’s conservative detractors are not sold though, arguing the reworked guidance is in pursuit of drafting tougher rules and hiding their true costs.
“The Biden administration has big plans to spend your hard-earned money and reshape your way of life,” Rep. Virginia Foxx (R-N.C.) said on the House floor Wednesday. “They’re working to concoct all matters of massively expensive regulations, including rules on climate change, social equity, income redistribution and creating a ‘social cost of carbon.'”
Foxx sponsored the amendment blocking the revised regulatory guidance, which was added to the spending bill by voice vote.
The Competitive Enterprise Institute backed Foxx’s amendment for passage. Clyde Wayne Crews, a fellow in regulatory studies at the conservative-leaning think tank, shared a Forbes op-ed he wrote earlier this year when asked for his thoughts on the revisions.
“Scrutiny would decrease as not only will costs be denied,” Crews said about the proposal then. “Rules of all sizes would be more readily deemed ‘net beneficial.'”
Others had similar worries.
“This final draft does not alleviate my concerns that the guidelines appear tilted to provide support for this administration’s policy preferences, such that a future administration with different policy preferences will almost certainly change them,” said Dudley, who is now director of the George Washington University Regulatory Studies Center.
Not so ‘simple’ to replace
Regulatory policy experts note that the revisions followed an exhaustive process in which OMB took public comment on the proposed changes and submitted them for peer review. The White House regulatory office Thursday responded to those comments in 94 pages and 586 footnotes grounding the changes in current economics literature.
That will make it tough for a subsequent administration to replace the update without going through a similarly rigorous process, said Richard Newell, president and CEO of Resources for the Future.
“I don’t think it would be that simple,” said Newell, an energy economist. He noted the circular underpins numerous federal decisions and rulemakings that could undergo legal challenge.
“If they were to change the guidance in a way that wasn’t scientifically valid — that was arbitrary — that could be litigated,” said Newell.
Challenges for the rulemaking revisions are expected, nonetheless. Whether they will be successful or not remains to be seen.
“The conservative movement has had a target on this the day it was announced in April,” Goodwin said.
Reporter Jean Chemnick contributed.
