How Appropriators Can Stop the Politicization of the OMB Circular A-4

House Appropriators Move to Block President Biden’s Politicized Approach to Regulatory Analysis

The U.S. House Appropriations Committee just released the text of the FY25 Financial Services and General Government (FSGG) Appropriations Bill. Included in the FSGG Bill is Section 205, a provision that would prevent the Biden Administration from continuing to use its new, highly politicized cost-benefit test when developing new rules.

EPIC has been calling for a halt to this subtle but very important process change, which allows new regulations to be approved if they satisfy the Biden Administration’s political agenda rather than the Federal Government’s longstanding, objective, nonpartisan test for cost-benefit analysis.

OMB Circular A-4

Most important new federal regulations are partially based on a careful assessment of their likely real-world impacts. If the benefits are likely to outweigh or justify the costs imposed by the rule, then regulators proceed with their planned regulation. If, however, the benefits do not justify the costs, then regulators generally may not proceed with their rule. This analysis of potential effects is generally known as cost-benefit analysis or benefit-cost analysis, and it has been employed for decades by conservative and liberal administrations alike. 

For more than 30 years, the core features of the regulatory development process, including the important role of benefit-cost analysis, have been laid out in Executive Order 12866. This EO built on prior presidential efforts to ground regulatory policy choices in rigorous analysis. For more than 20 years, the more granular standards of analysis have been articulated in OMB Circular A-4 of the U.S. Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs (OIRA). While imperfect, those standards largely reflected well-established principles of objective, nonpartisan analysis, and thus have been maintained and used across presidential administrations. The consistent analytical standards have helped to inform regulatory decision-making across most domains of federal regulatory policy for many years.  

How Did the Biden Administration Change A-4?

In November 2023, the Biden Administration dramatically rewrote OMB Circular A-4, which is key to the regulatory drafting process for most of the U.S. Federal Government. Now, rather than promoting objectivity and neutrality in regulatory impact analysis, the new OMB Circular A-4 puts many of the subjective, value-laden judgments of policymaking right into the underlying analytical framework used for decision-making.

The scales regulators use to weigh regulatory benefits and costs are now explicitly altered to allow, for example, more “weighting” for preferred regulatory policy choices. The result is that cost-benefit analysis no longer provides policymakers and the public with a dispassionate view of regulatory impacts. Rather, it is designed to provide extra analytical points for favored policy choices, making it more likely that new, highly partisan rules will easily pass the cost-benefit analysis test. Many cautioned against this politicization of analysis, but those ardent pleas were rejected. 

Congressional Appropriators Respond

On Tuesday, June 4, 2024, House Appropriators signaled they intend to prevent the Biden Administration from continuing to distort and politicize regulatory cost-benefit analysis through defunding its use. The FY25 FSGG Bill, which will be considered by the Financial Services and General Government Subcommittee this week, reads: 

SEC. 205. None of the funds made available by this Act may be used to implement the proposed revisions, published on April 6, 2023, to OMB Circular A-4.

This prohibition, championed by Congresswoman Ashley Hinson, would prevent the continued use of OMB’s highly partisan rewrite of OMB Circular A-4. It would not stop the Biden Administration from making policy choices in new rules, but it would help to prevent the erosion of objectivity and transparency in the regulatory decision-making process. It would make it more difficult for regulators to suggest that extreme, ideological policy choices found in new rules are somehow required by dispassionate regulatory analysis.  And it might even save the American taxpayers some money. Congresswoman Hinson and the House Republican Appropriators should be commended for their leadership on this complex issue of enormous importance to U.S. federal regulatory policy.

Conclusion

The Federal Government has largely used a consistent analytical framework for developing and justifying new regulations across the decades. While imperfect, that framework emphasized objectivity and neutrality, and it reflected an enduring political compromise on the basic features of analysis used in regulatory decision-making. The Biden Administration broke that longstanding bipartisan compromise when it rewrote the Federal Government’s regulatory analysis framework to preference it desired policy outcomes.

Congressional Appropriators, who set and oversee federal agency funding, have noted the abrupt change to this important feature of the regulatory development process, and they have made clear their intent to stop it. They are right to block funding for the Biden Administration’s revisions to OMB Circular A-4.  The Administration would do well to return promptly to rigorous, objective cost-benefit analysis.  

For further reading:

For more perspective on the analytical standards of rules, including what the Executive Branch is already required to provide to Congress, read, “Reinforcing the Congressional Review Act (CRA): To Facilitate Robust CRA Review by Congress, the Executive Branch Must Conduct Robust CRA Review First.”

For a quick overview of the regulatory development process, see the EPIC flowchart, “The Regulatory Development Process.”

Need a quick general overview of rules and regulations? See our “EPIC Explainer: What is a Rule?

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