Policy Impacts

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, Policy Integrity advocated for federal officials to revise Circular A-4 in line with the best available economic practices so that agencies crafting new rules will base their decisions on a more up-to-date and 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In April 2023, in line with our suggestions, OMB proposed updates to Circular A-4 aimed at modernizing several outdated practices.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. Under that guidance, agencies would craft new rules with a better understanding of how their policy choices are likely to affect the public.

In early 2025, when the second Trump Administration directed OMB to rescind Circular A-4 and replace it with the 2003 version, without the required peer review or evidence of reasoned analysis, Policy Integrity published a report explaining why a mere directive to rescind Circular A-4 was insufficient. Policy Integrity also explained why courts might find agency actions relying on the 2003 version arbitrary and capricious. Policy Integrity continues to engage in legal efforts on these matters.