In 2003, the Office of Management and Budget (OMB) published Circular A-4. A-4 is little-known but crucial oversight measure for new regulations. It gives important guidance to federal agencies on cost-benefit analysis. And it is now in the process of being gutted. But a new bill, the Regulatory Accountability Act (RAA), might save A-4.
Currently, the guidance of A-4 falls well short of its potential. It has no provisions for adding up the total cost of federal regulation. According to my CEI colleague Wayne Crews, it “embodies an archaic 20th century taxonomy that enshrines the administrative state as such, believes in agency ‘expertise,’ and obscures or leaves out most regulatory burdens.”
The Biden administration is now moving forward with a rewrite of A-4 to weaken what good comes from its cost-benefit analysis and to embolden Biden’s bureaucrats in pursuing “whole-of-government” rulemaking plans.
Legislation introduced earlier this year from Sens. John Thune and James Lankford and Rep. Beth Van Duyne would help fill the gaps left in regulatory analysis. Hopefully, it would also curb Biden’s ability to warp A-4 to fit his regulatory agenda.
Their bill, the Regulatory Accountability Act, would amend Section 553 of title 5 of the United States Code, which covers the Administrative Procedure Act (APA). This mandates what evidence agencies must use when attempting to justify a rulemaking action.
Under the current version of A-4, agencies are only required to “rely on peer-reviewed literature, where available.” This weak requirement has allowed agencies to move forward with regulations without the proper empirical evidence and thus enabled more than 3,000 mostly never-needed regulations finalized each year.
The RAA would force agencies to rely on the “best reasonably available scientific, technical, or economic information.” By making this requirement more stringent, regulators should find it harder to push forward with unnecessary or politically motivated rules.
The legislation also stipulates that agencies “shall adopt the least costly rule considered during the rule making…that meets relevant statutory objectives.” As noted by CEI’s Daren Bakst, a cost-benefit analysis requirement has “little meaning if the analysis [is] simply an academic exercise,” so the change here is very important. It would require agencies to use less costly regulations, rather than more costly regulations, to achieve a given objective.
The bill would create a new ”high impact” classification for regulations estimated to cost more than $1 billion. Research from the American Action Forum has found that under President Bush, there were an average of 1.6 high impact rules per year, and an average of 3.25 under President Obama. Bush over eight years published $35 billion worth of high-impact rules, and Obama imposed $42 billion from 2012 to 2014 alone.
The RAA would require agencies to hold hearings on proposed high-impact rules before finalizing them. This would provide regulated entities an opportunity and public forum to cross-examine whether the agency has selected the least costly alternative and whether the evidence and information relied upon is sound.
Lastly, but still important, the bill would also codify in law the A-4 requirement that agencies conduct cost-benefit analysis for rules. CEI’s Crews often points out that the “hidden tax” of regulatory costs and categories of costly interventions have been disregarded for decades such that their true magnitudes are unknown – but likely swell into the trillions just as federal spending does.
The changes the Regulatory Accountability Act makes would hold agencies to a higher standard when rulemaking and help ensure that the rules are tailored to achieve justified and desired outcomes without undue burden.
The RAA has a 30-year history that shows the longstanding need for its reforms, as wells as substantial bipartisan support.
A lesser version of the RAA was first introduced in 1992 by Sen. Orrin Hatch (R-UT) and Rep. Dennis Hastert (R-IL). It was later reintroduced by Sen. John Glenn (D-OH) in 1995 and in 1996 by Rep. Lamar Smith (R-TX). After a brief hiatus, Smith introduced a beefed-up version of the bill over a decade later in 2011 during the 112th Congress along with Sen. Rob Portman (R-OH). Smith’s legislation passed the House that year 253-167 with the support of 19 Democrats.
Rep. Bob Goodlatte later became the main sponsor of the legislation during the 114th Congress and it passed in 2015 250-175 with the support of 8 Democrats. Goodlatte introduced it again in the 115th Congress and it passed the House in 2017 as part of a larger regulatory reform proposal coincidently also called the Regulatory Accountability Act, 238-183 with 5 Democrats voting aye.
This is the first time the legislation has been led by Sen. Thune and Sen. Lankford. Rep. Van Duyne’s first introduction of the bill was in 2022.
Back when the legislation resurfaced in 2015, CEI’s Greg Conko wrote in a RealClear Policy op-ed that “this kind of bipartisan regulatory reform is just what we need to stimulate America’s economy, reinvigorate job growth, and move our country forward with a real pro-growth agenda.”
In this era of partisanship and divided government, a regulatory reform measure like the Regulatory Accountability Act with a history of Republican and Democrat support stands as one bill both parties can and should get behind.
This post is part of an occasional series looking at regulatory reform bills in Congress. Previous posts cover the REINS Act, GOOD Act, Less Is More Resolution, Article I Regulatory Budget Act, ALERT Act, Separation of Powers Restoration Act, and the Small Business Regulatory Flexibility Improvements Act.