How a Biden Executive Order Could Mean Stricter Regulations

Amidst the flurry of executive orders signed by President Joe Biden on the day of his inauguration was one that may have a far more significant impact on the regulatory environment than you might think from the name.

The Jan. 20 order was titled “Modernizing Regulatory Review." It was directed to the heads of executive departments and agencies – like the Federal Motor Carrier Safety Administration, for instance, or the Environmental Protection Agency.

Whenever agencies like FMCSA or EPA go through the rulemaking process (which can take years of proposing, gathering input, revising, and so forth), the final step for a “significant” regulation is to send it to the White House for review. For nearly 40 years, presidents of both parties have relied on an obscure office called the Office of Information and Regulatory Affairs (OIRA), part of the Office of Management and Budget, to do those reviews. In other words, when we say a regulation has been “sent to the White House for review,” we really mean OIRA. (If you haven't heard of it before, don't feel bad; in 30 years of covering trucking, I've always just said the OMB was reviewing regulations.)

OIRA reviews the cost/benefit analysis of rulemakings, checks that all the regulatory procedures were properly followed, and tries to ensure consistency across federal regulatory agencies.

But some observers believe that Biden's executive order will expand the power of this office.

In his EO, Biden explained that as the government mobilizes to deal with serious challenges faced by our nation, “including a massive global pandemic; a major economic downturn; systemic racial inequality; and the undeniable reality and accelerating threat of climate change…, it is important that we evaluate the processes and principles that govern regulatory review to ensure swift and effective federal action.”

OK, that makes sense.

The order tells the director of OMB to work with executive departments and agencies to come up with recommendations for “improving and modernizing regulatory review.” And, it says, those recommendations should “ensure that the review process promotes policies that reflect new developments in scientific and economic understanding,” and “promote the efficiency, transparency, and inclusiveness of the interagency review process.”

OK, that’s all good.

But here’s where it gets sticky:

“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. The recommendations should also include proposals that would ensure that regulatory review serves as a tool to affirmatively promote regulations that advance these values.”

It also says that "any quantitative or qualitative analysis of the costs and benefits of regulations, [should] ensure that regulatory initiatives appropriately benefit and do not inappropriately burden disadvantaged, vulnerable, or marginalized communities.”

As part of the regulatory process, agencies have to look at the costs vs. the benefits of any new rule. But how do you compare costs of something like buying a new mandated technology against things that aren’t easily measured numerically?

Quantifying the Unmeasurable

This is not a new question. The issue of how you value a human life has been controversial. In 1972, a member of a Nixon administration task force on regulating the auto industry put a life’s worth at $885,000 in today’s dollars, according to a New York Times article last year. Two years later, using a similar figure, the Department of Transportation rejected a rule on underride guards for trailers because the cost to the industry would have been more than the value of lives it would have saved. The bars became required in 1998 when the DOT’s value of a life reached $2.5 million.

Under President George W. Bush, the dollar value of life for regulatory decisions went down. Under President Barack Obama, it went up. Different agencies use slightly different numbers. The most recent DOT figure, from 2016, puts the value of a human life at $9.6 million.

So how do we put a dollar figure on factors such as racial justice and human dignity? Not that I’m saying these shouldn’t be looked at. But regulatory agencies live on numbers and data.

Using Regulation to Advance the White House Agenda

The move is an issue that has caught the attention of people on both sides of the aisle.

As the left-leaning Huffpost reported, “among left-leaning experts on regulation, it’s a signal that Biden could break with 40 years of conservative policy. James Goodwin, a senior policy analyst at the Center for Progressive Reform, told HuffPost, ‘It has the potential to be the most significant action Biden took on day one.’” “Progressives have bemoaned OIRA’s narrow economic cost-benefit focus, arguing that it ignored social and environmental costs and benefits not easily translated into dollar amounts,” the article noted.

The center-right policy institute American Action Forum called the order a surprise, and said it “signals that the Biden Administration plans to lean heavily on regulation to advance its policy agenda.”

The order seems to bolster the benefits side of the equation more than the costs, said AAF. Though reviews are supposed to account “for regulatory benefits that are difficult or impossible to quantify, and does not have harmful anti-regulatory or deregulatory effects,” it noted, “There is no mention of costs that are similarly difficult to quantify.”

Critics also say the move puts too much power in the hands of the executive branch. Although agencies are part of the executive branch, the scope, direction and limitations on federal agency powers have been set by Congress.

What Could This Mean for Trucking?

There’s concern that the changes could have a significant impact on trucking regulations. I turned to Dave Osiecki and his team at Scopelitis Transportation Consulting for more insight.

The order “makes clear to STC that the de-regulatory efforts of the previous administration are over – full stop!” he said in an email.

They suggest that trucking policy issues such as the potential for mandated use of speed limiters (a safety and environmental issue), medium- and heavy-duty vehicle fuel efficiency standards (an environmental and public health issue), and testing hair specimens for drugs (a perceived racial bias/justice issue) will be carefully considered by the Department of Transportation and the Environmental Protection Agency under these directives.

Osiecki notes that cost-benefit analyses are an important part of the federal regulatory process – but under this executive order, the “benefits” will be addressed in a very different way.  He wonders, however – How will a federal agency, like EPA or FMCSA, “fully account for regulatory benefits that are difficult or impossible to quantify” as outlined in the order? “That’s a bit of a head-scratcher,” he said.

While the possible effects on trucking are all speculation at this point, Osiecki predicts that this “full accounting” of these factors required by Biden’s executive order “is sure to increase the benefits side of the equation and likely to result in more, and more stringent, safety and environmental regulations impacting trucking and our society.”

Originally posted on Trucking Info