CEI Comments on Proposed OMB Circular No. A-4
RE: Request for Comments on Proposed OMB Circular No. A-4, “Regulatory Analysis”, 88 FR 20915 (Apr. 7, 2023), Docket OMB-2022-0014
Dear Mr. Revesz,
I am an attorney employed by the Competitive Enterprise Institute. I respectfully submit the following comments in response to Office of Management and Budget’s proposed update to Circular A-4 on regulatory analysis. Founded in 1984, the Competitive Enterprise Institute is a non-profit research and advocacy organization that focuses on regulatory policy from a pro-market perspective.
There are many problems with the proposed updates to Circular A-4. This comment will focus on the problems in Chapter 10 on “Distributional Effects” and Chapter 11 on “Treatment of Uncertainty.” Other colleagues at CEI will submit comments discussing the problems with different parts of the proposed draft.
The primary problems in these two chapters are:
(1) They fail to properly consider the distribution of opinions concerning tradeoffs rather than just groups (such as by income, race, sex, or gender).
(2) They fail to make the differences of the distribution of opinion concerning tradeoffs mandatory, which it should be to accurately evaluate tradeoffs.
(3) They improperly endorse regulating with a lack of knowledge concerning the subject matter.
(4) They fail to require that the uncertainty in known statistical variation in measurements be explicitly expressed.
(5) They fail to require that there be at least 95% certainty that the proposed regulation will be beneficial.
- Circular A-4 Should Require the Distributive Effects of Different Tradeoff Values
Chapter 10 of the draft Circular-A4 concerns how regulations may impact different groups of people differently. This topic is important to consider, as many of the people or organizations requesting regulations are likely not those most severely impacted. Even if the regulation is a net benefit, it could cause severe and devastating harms to a disadvantaged minority. Those disadvantaged minorities are likely to be poor and unable to effectively express the harm done to them to the agency.
While the agency should consider distributive effects, the proposed draft fails to consider an essential aspect of the problem. The proposed draft Circular A4 has a focus on “divid[ing] up [the population] in various ways (e.g., income groups, race or ethnicity, sex, gender, sexual orientation, disability, occupation, or geography; or relevant categories for firms, including firm size and industrial sector).” p. 61. However, the proposal fails to consider the distributive effects of those with tradeoff values further away from the average or value selected by the agency. Additionally, it fails to make consideration of the distribution of tradeoff values mandatory.
Many regulation decisions come down to evaluating potential tradeoffs values between various valuable values. For instance, safety regulations often trade off possible health and safety values against cost, efficiency, and speed benefits. What tradeoff is made often determines whether the regulation is a net benefit.
Members of the public do not all share the same views. Nonetheless, many agencies today use an “average” value of such tradeoffs of the public as if that were the only tradeoff value of the public, but this is incorrect. This decision often occurs in cost-benefit analysis when the agency converts safety or other non-monetary benefits to specific monetary benefits. Instead, the agencies should establish a distribution for every evaluation of the public opinion of such tradeoffs.