Beware: The Biden Administration Refers To “Economically Significant” Regulations In The Past Tense

The past few days have brought renewed attention to Biden’s Executive Order 14,094 on “Modernizing Regulatory Review,” issued April 6, 2023 and published in the Federal Register on April 11.

The concern is over the raising of the threshold for what gets considered a “significant regulatory action” warranting additional scrutiny from $100 million to $200 million in annual effect. That new hurdle is subject to further upward ratcheting by the Office of Management and Budget as GDP changes. Biden also directed the OMB to revise so-called “Circular A-4” guidance to agencies on how to conduct regulatory review to reflect the new higher bar as well as make other changes that will unfortunately result in less, not more, regulatory supervision.

While rules that create interferences or inconsistencies across agencies, “materially alter” budgetary impacts of programs, or raise significant legal or policy issues can still be designated “significant regulatory actions,” the bottom line is that actions costing less than $200 million are no longer automatically considered significant ones, and will fall below the radar of OMB review.

Customarily, those $100 million rules were always referred to as “economically significant” (although the specific phrase does not appear in law or executive order). After Biden’s new order, the presumption appeared to be that we’d henceforth call $200 million rules “economically significant.”

“Economically significant” is now defined in the past tense, seemingly on track to vanish from the Unifed Agenda of Federal Regulatory and Deregulatory Actions, the twice yearly compilation that has showcased this subset for decades now. The screenshot below from reginfo.gov’s Unified Agenda “advanced search” landing page captures this transition.

“Economically significant” is now replaced with the far less melodic “Section 3(f)(1) Significant” rules for the reckoned >$200 million subset, as the next screen-capture shows.

The symbolism of getting rid of the “economically significant” designation is important given an administration that tends to see federal intervetion as a “net beneficial” first step rather than a last resort. While we know that several hundred rules every year are “significant,” it was always that critical smaller subset reluctantly acknowledged to exceed $100 million in annual effects that caused most concern for the regulated. Indeed it was those “significant regulatory actions” that were notable for their role in Donald Trump’s “one-in, two-out” regime. We knew too little about regulatory burdens already; now we will know even less as the higher threshold allows more rules to do the limbo.

Incidentally, OMB will presumably tweak the definition of “Other Significant” rules by the time the Fall 2023 Unified Agenda appears, since the now-obsolete term “economically significant” remains intact in the description of these allegedly lesser rules.

Read the full article on Forbes.