Republicans in the House are raising concerns about a covertly issued executive order allowing the Biden administration to “open the regulatory floodgates.” Fewer rules will need to go through the interagency review process due to the “modernizing regulatory review” order, released on April 6. This will further unleash the red tape faucet that has been running nonstop since President Biden entered office.
In a letter to administration officials, House Oversight Committee chairman James Comer and Representative Pat Fallon wrote that even under pre-existing rules for federal regulatory development, the Biden Administration’s pace of regulation and escalating regulatory burdens have been breathtaking. The two continue by stating that the Biden administration has surpassed by far the cumulative costs and paperwork burdens imposed by the Trump and Obama Administrations—imposing $318.1 billion in new costs and 217.4 million new paperwork hours.
Through the new executive order, the Biden Administration now proposes to “open the regulatory floodgates” even further, the pair warn.
Comer and Fallon, who lead the Subcommittee on Economic Growth, Energy Policy, and Regulatory Affairs, have requested a staff briefing with OMB Director Shalanda Young and OIRA Administrator Richard Revesz before May 11 to discuss their concerns.
Currently, a proposal is considered a “significant regulatory action” if it would have an annual impact on the U.S. economy of at least $100 million. Such actions must go through a formal, required “interagency review” supervised by OIRA. However, the new executive order from Biden raises the cap to $200 million annually.
Comer and Fallon say this will shield many high-cost regulations from OIRA cost-benefit analysis. Making it more straightforward for expensive rules to avoid thorough economic analysis now is not the time, given that U.S. economic growth is faltering and inflation is still eroding Americans’ purchasing power.
Moreover, the latest executive order alters the existing guidance that allows discretionary review for regulations below $100 million but with novel legal or policy issues resulting from legal mandates. The revised language of the executive order now allows for a discretionary review of legal or policy issues that align with the President’s priorities or the principles outlined in the order. This means that decisions previously made by staff will now be made by the presidential appointee who serves as the administrator of OIRA.
Historically, between 60% and 80% of all rules, the OIRA staff reviews are these “other significant” laws below the monetary threshold. Additionally, the new order requires OIRA and agencies to encourage inclusive regulatory policy and public participation by involving groups historically underrepresented in rulemaking. Further, it instructs OIRA to avoid scheduling meetings with participants who request them frequently and schedule them with individuals who have not traditionally requested such meetings. Agencies have been instructed to promote fair and substantial involvement from various individuals or groups who have an interest or are affected.
Comer and Fallon write that the Biden Administration has used the words “inclusivity” and “equity” as a mantle to advance left-wing agendas. As in the infamous case of the Obama Administration’s Waters of the United States Rule, they are concerned that it is a smokescreen for promoting improper agency grassroots lobbying to ensure pro-regulatory allies’ public comments tilt agencies’ administrative records towards such causes.
Comer says the administration is changing the regulatory review and analysis process to make passing regulations that align with progressive goals easier. Comer said these policies could enable distorted calculations of anticipated regulatory benefits and pave the way for more regulations that kill the economy. President Biden has already harmed the economy. More laws that impose higher regulatory costs on American businesses and workers are not necessary now. The Oversight Committee strives to make our concerns about applying these policies transparent.
The letter continues to warn that a proposed amendment to OMB Circular A-4 threatens to open the cost-benefit analysis process for new rules to massive regulatory distortions. If implemented as intended, the changes could ensure inflated and distorted calculations of projected regulatory costs. The new regulations could harm the economy in the guise of progressive causes.
The OIRA administrator, Revesz, wrote in a blog post that the federal regulatory review process had yet to be updated since the 1990s, despite significant scientific and economic knowledge advances. Revesz believes that the new measures will lead to a more effective and efficient regulatory review process, which can enhance people’s lives by safeguarding children from toxic substances, reducing daily expenses for families, improving rail safety, and boosting the economy by focusing on both the middle class and those at the bottom.
An announcement was made that Circular A-4 is being reviewed to help agencies accurately assess the value of future regulatory effects and benefit the American public. The revision includes the following:
- The discount rate is being updated to convert future costs and benefits into present values.
- Provide more detailed instructions on how to account for risk and uncertainty in accounting.
- Greater support for analyzing distributional effects.
President Biden’s memo on his first day in office instructed OIRA to work with executive branch departments and agencies to modernize regulatory review, which aligns with this announcement.