Significant regulatory action
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Significant regulatory action is a term used to describe an agency rule that has had or might have a large impact on the economy, environment, public health, or state or local governments. These actions may also conflict with other rules or presidential priorities. The term was defined in 1993 by President Bill Clinton's Executive Order 12866 and modified in 2023 by President Joe Biden's (D) Executive Order 14094. As part of its role in the regulatory review process, the Office of Information and Regulatory Affairs (OIRA) determines which rules meet this definition are thus are subject to its review.[1][2][3]
Background
Executive Order 12866, titled "Regulatory Planning and Review," is an executive order issued by President Bill Clinton in 1993 establishing principles and processes to govern federal agency rulemaking, regulatory planning, and regulatory review. It was designed to guide presidential oversight of regulatory and administrative policy. This order authorizes the Office of Information and Regulatory Affairs (OIRA) to review what it considers all new and preexisting significant regulatory actions and directs OIRA "to ensure that regulations are consistent with applicable law, the President's priorities, and the principles set forth in this Executive order, and that decisions made by one agency do not conflict with the policies or actions taken or planned by another agency." OIRA has 90 days (with a possible 30 day extension) to complete its review of a significant regulatory action; the rule in question cannot be published in the Federal Register until the office completes its review without recommendations or the review period expires.[1][2][3]
President Joe Biden (D) issued Executive Order 14094, titled "Modernizing Regulatory Review," on April 6, 2023, in an effort to revise the regulatory review process. The order changed the definition of a significant regulatory action to include any action with an annual effect of $200 million or more, as opposed to $100 million or more. It also directed the OIRA administrator to review all other significant rules (those regarding novel policy issues) and sought to classify agency rules in an effort to limit the number of actions that require review by OIRA.[4][5]
State-level significant regulatory action
The process for states to determine whether a rule is significant often differs from the federal process and varies by state. In some cases, executive review of state regulation is required, whereas other states may require legislative review or review by an independent agency. In some states, all rules must undergo the same degree of review. In other states, a review of regulatory action is triggered by the rule's significance, which is determined by an economic threshold or a significant small business impact.[6]
Forty-eight states, as of a 2022 report by the Mercatus Center, have an impact analysis requirement. Some states have an economic threshold that is used to determine whether a rule is significant and requires an analysis, similar to the degree of economic significance at the federal level. The threshold for economic significance can vary by state, however, some states adopt the federal standards for determining what rules are significant.[6]
Definition
E.O. 14094, which amended certain provisions of E.O. 12866, defines a significant regulatory action as "any regulatory action that is likely to result in a rule that may:"[1]
| “ | (1) have an annual effect on the economy of $200 million or more (adjusted every 3 years by the Administrator of OIRA for changes in gross domestic product); or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, territorial, or tribal governments or communities;
(3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or
(4) raise legal or policy issues for which centralized review would meaningfully further the President's priorities or the principles set forth in this Executive order, as specifically authorized in a timely manner by the Administrator of OIRA in each case.[4][7] |
” |
| —Executive Order 14094 | ||
The term Section 3(f)(1) significant rule under E.O. 14094, formerly known as an economically significant rule under E.O. 12866, refers to a regulatory action meeting part (1) of the above definition. E.O. 14094 raised the monetary threshold for rules meeting part (1) of the above definition from $100 million or more to $200 million or more. A regulatory action that is not Section 3(f)(1) significant but that meets some other part of the above definition, or is considered important by the agency proposing the rule, is referred to as an other significant rule. [8][9][10][11]
As part of the regulatory review process outlined by E.O. 12866, the Office of Information and Regulatory Affairs is responsible for determining which regulatory actions meet this definition and thus are subject to its review.[1][2]
Noteworthy events
Biden administration issues highest number of section 3(f)(1) significant rules since Reagan (2024)
Federal agencies issued thirty-four section 3(f)(1) significant rules, formerly known as economically significant rules, in April—higher than any month since the Reagan administration, according to The George Washington University Regulatory Studies Center (GW RSC). A section 3(f)(1) significant rule refers to a regulatory action with an estimated annual economic impact of $200 million or more.
The Biden administration issued 32 other significant rules in April, bringing the total count of significant final rules to 66—more than any other month under the Biden administration.
Scholars from the GW RSC argue that the recent increase in regulatory actions is due to the Congressional Review Act’s (CRA) lookback period. The CRA authorizes Congress to review rulemaking activities by federal agencies and pass joint resolutions of disapproval to overturn a rule and block agencies from creating similar rules in the future. The lookback period refers to a period of time at the beginning of a new presidential administration in which rules published within the last 60 legislative days of the previous administration are eligible for consideration under the act.
Zhoudan Xie, a senior policy analyst for GW RSC, wrote, “If there is a presidential transition next year, the lookback period gives the incoming president and Congress a unique opportunity to overturn rules issued by the current administration. … Clearly, agencies are rushing to finalize rules with the early deadline in mind.” Xie wrote that the exact dates for the lookback period are uncertain and that the “estimate ranges from as early as May 22, 2024 to the beginning of August.”[12]
Biden raises monetary threshold for significant rules (2023)
President Joe Biden (D) issued an executive order on April 6, 2023, to make changes to the regulatory review process. The order raises the monetary threshold for classifying significant rules and seeks to reduce the number of actions that require review by the Office of Information and Regulatory Affairs (OIRA).
The executive order changes the definition of a significant regulatory action to include any action with an annual effect of $200 million or more, as opposed to $100 million or more. It also directs the OIRA administrator to review all other significant rules (those regarding novel policy issues) and seeks to classify agency rules in an effort to limit the number of actions that require review by OIRA. The order also directs the Office of Management and Budget (OMB) to update regulatory analysis guidance Circular A-4 within one year, among other provisions.[4][5]
Analysis of significant regulatory actions under the Trump administration (2017)
A study released on October 1, 2017, by Clyde Wayne Crews Jr. of the Competitive Enterprise Institute found that during the first nine months of Donald Trump’s (R) presidency, his administration issued 116 significant final rules, a 58 percent reduction compared to the 274 significant rules finalized by the administration of President Barack Obama (D) during the same nine-month period in 2016.[13][14]
See also
- Executive Order 12866
- Truth in Regulating Act
- U.S. Office of Information and Regulatory Affairs
- U.S. Office of Management and Budget
- Major rule
External links
Footnotes
- ↑ 1.0 1.1 1.2 1.3 Federal Register, "Executive Order 12866," October 4, 1993
- ↑ 2.0 2.1 2.2 Center for Effective Government, "Executive Order 12866," accessed July 20, 2017
- ↑ 3.0 3.1 Environmental Protection Agency, "Summary of Executive Order 12866 - Regulatory Planning and Review," accessed July 20, 2017
- ↑ 4.0 4.1 4.2 Federal Register, "Modernizing Regulatory Review," April 11, 2023
- ↑ 5.0 5.1 The White House, "Strengthening Our Regulatory System for the 21st Century," April 6, 2023
- ↑ 6.0 6.1 Mercatus Center, "A 50-State Review of Regulatory Procedures," April 25, 2022
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ Center for Effective Government, "Economically Significant," accessed July 21, 2017
- ↑ Center for Effective Government, "Other Significant Rule," accessed July 25, 2017
- ↑ Federal Regulations Advisor, "Economically Significant: A Threshold Snapshot of OMB's Regulatory Docket," August 9, 2013
- ↑ Office of Information and Regulatory Affairs, "Regulatory Information Service Center," Spring 2023
- ↑ GW Regulatory Studies Center, "A Regulatory Surge in April 2024," May 10, 2024
- ↑ Competitive Enterprise Institute, "Red Tape Rollback: Trump Least-Regulatory President Since Reagan," October 1, 2017
- ↑ Washington Examiner, "Trump ahead of Reagan's record in cutting regulations," October 3, 2017
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