Peer Review Comments on the Proposed Updates to OMB Circular A-4

Abstract

The Office of Management and Budget’s Circular A-4 on regulatory analysis states that it is intended to help agencies prepare “high-quality and evidence-based analysis.” Referring to Executive Order 12,866, which has been in effect since 1993, Circular A-4 treats benefit-cost analysis as the principal form of regulatory analysis for agencies to use. Benefit-cost analysis ultimately aspires to identify for decision-makers alternative regulatory actions that will maximize net benefits to society. But it too has the same main purpose of any kind of regulatory analysis: to inform decision-making. As Circular A-4 properly puts it, benefit-cost analysis “provides policymakers and the public with information about the important advantages and disadvantages of different courses of action.”

In light of the importance of analysis in informing and justifying regulatory decision-making, it is rather astonishing that Circular A-4 has not been updated in twenty years. Admittedly, consistency and continuity in the standards for regulatory analysis would counsel against unduly frequent updates. Still, it is clear that Circular A-4 is now long overdue for an updating. OMB is thus to be commended for initiating an update process, inviting public comment on a proposed update, and seeking an independent peer review. The comments in this peer review report are supportive of changing the Circular. Nevertheless, they are also intended to suggest ways to help an updated Circular A-4 better fulfill its purpose of helping agency analysts produce analyses that can better inform decisions.

In this report, two main themes stand out. First, given the important position that Circular A-4 occupies in guiding agency analysts (and others) about how to perform regulatory analysis, OMB would do well to make additional efforts to keep the document as clear as possible and to improve its digestibility and organizational coherence. The 2003 version of Circular A-4 was 48 pages long, while the proposed update is now 91 pages in length. That fact alone should suggest that there are opportunities in revising the proposed update to clarify, reorganize, and streamline the document to make it more useable. After 20 years, OMB ought to find ways not merely to bring Circular A-4’s methodological and analytical recommendations up to date but also to make the document much more cogent and user friendly.

Keywords: Regulation, rulemaking, regulatory analysis, benefit-cost analysis, regulatory impact assessment, RIA, regulatory review, presidential oversight, Executive Order 12,866, OMB, Circular A-4, regulatory decision-making, government, administrative agencies, administrative law