President Biden’s “Modernizing Regulatory Review” memorandum foreshadows important changes to come in how the US Environmental Protection Agency (EPA) and other regulatory agencies are able to conduct business. The memo indicates an intention to reduce institutional constraints on regulatory agencies, enabling them to issue regulations more quickly and with less second-guessing from other parts of the federal government.
For the past 40 years—ever since Ronald Reagan was president—all significant EPA regulations have been subject to review by the Office of Management and Budget (OMB) before they could be issued as proposed rules for public comment, and again before they were issued as final rules. This regulatory review process is currently governed by President Bill Clinton’s Executive Order 12866, issued in 1993.
Under the Clinton Executive Order, OMB is directed to “provide meaningful guidance and oversight” of regulations and to “ensure that regulations are consistent with” several “Principles of Regulation” that include regulating only when the costs are justified by the benefits, “impose the least burden on society,” and ensuring that decisions are based on the best “scientific, technical, [and] economic” information. Overall, the Clinton EO expresses more concern about the potential costs of regulations and less attention to the benefits, which sets a tone of imposing constraints on regulations. In addition, this process makes OMB the “enforcer” as its role is not just to review draft EPA regulations, but also to second-guess EPA judgments on both science and policy.
Often OMB review delays regulations, lowers benefits or increases costs from what the EPA had originally estimated, and weakens regulatory requirements which in turn could result in more health harms due to less regulation. The changes made by regulatory agencies to respond to OMB are often hidden from public view, but one well-documented example is the removal of asthma in the estimated health benefits for EPA’s 2013 proposed rule on formaldehyde emissions from composite wood products.
The Biden memo strikes a very different tone compared with the Clinton Executive Order. It first signals the new President’s intention to continue with a regulatory review process, but it quickly moves on to observe that to address today’s challenges, “it is important that we evaluate the processes and principles that govern regulatory review to ensure swift and effective Federal action. Regulations that promote the public interest are vital for tackling national priorities.”
The memo then instructs the director of OMB to provide “a set of recommendations for improving and modernizing regulatory review. These recommendations should provide concrete suggestions on how the regulatory review process can promote public health and safety, economic growth, social welfare, racial justice, environmental stewardship, human dignity, equity, and the interests of future generations.”
Further instructions to the OMB director underscore the importance of considerations beyond costs of regulations, indicating that the recommendations should ensure that it “does not have harmful anti-regulatory or deregulatory effects,” and also “ensure that regulatory initiatives appropriately benefit and do not inappropriately burden disadvantaged, vulnerable, or marginalized communities.” It also signals an intent to give greater latitude to the regulatory agencies in designing, developing and issuing regulations, with less second-guessing from OMB. Thus, the overall message of the Biden memo is a significant departure from the Clinton EO.
The Biden memo itself does not direct any changes to the regulatory review process but initiates a reconsideration of the existing process. The follow-up to the memo will be largely internal to the Biden administration, but the memo also indicates that the “recommendations should be informed by public engagement with relevant stakeholders.”
The Program on Reproductive Health and the Environment recommendations to EPA were developed in consultation with 40 scientists and chemical policy experts around the country to improve hazard and risk assessment on harmful chemicals and pollutants. The recommendations address many issues raised by the Biden memo such as the need to tackle disproportionate environmental hazards in communities of color and low-income communities. It seems likely that Biden’s memo will lead to a new Executive Order on regulatory review that will determine the extent to which the relationship between OMB and the regulatory agencies such as EPA will change.
The bottom line—Biden’s memorandum on regulatory reform signals an intention to change the regulatory review process so that it better serves the public.
About the author
Daniel Axelrad worked at US EPA for 33 years in the Office of Pollution Prevention and Toxics (1987-1993) and the Office of Policy (1993-2020). His areas of expertise include science policy, children’s environmental health, benefit-cost analysis and risk assessment. He has a bachelor’s in economics from Occidental College and a master’s in Public Policy from Harvard University.