Modernizing Regulatory Policy
The primary guidance on how federal agencies should assess the costs and benefits of regulations, known as Circular A-4, went unchanged for two decades after its introduction in 2003. Starting early in the Biden administration, we pushed to revise Circular A-4 in line with the best available economic practices so that agencies crafting new rules will base their decisions on more comprehensive understanding of expected impacts. In particular, we endorsed lower discount rates to better account for long-term health and environmental benefits, and robust distributional analysis to capture impacts on overburdened communities.
In April 2023, in line with our suggestions, OMB proposed updates to Circular A-4 aimed at modernizing several outdated practices. The updates included improved consideration of benefits that occur in the future or outside the United States; assessment of equity concerns related to the distribution of regulatory impacts; behavioral economics issues; and other matters. After this revision was proposed, we organized coalitions of economists and environmental organizations supporting the proposal and offering additional reforms.
The final guidance, published in November 2023, incorporated key priorities that Policy Integrity had advanced for years and specific suggestions that we offered in our comment letter to OMB. As a result, agencies will craft new rules with a better understanding of how their policy choices are likely to affect the public.