What Is Circular A-4?
Since President Reagan, whenever federal agencies have considered significant regulations — such as controls on pollution or safety standards for new products — they have been required to conduct cost-benefit analysis. In theory, this analysis enables regulators to quantify and monetize both the benefits and costs of regulation, determine whether r
Discounting
Current Guidance: In cost-benefit analysis, a discount rate translates impacts that occur at different times into a common present value. As the current Circular A-4 explains, when regulatory impacts occur at different times, “it is incorrect simply to add all of the expected net benefits or costs without taking account of when they actually occur
Distributional Analysis
Current Guidance: Circular A-4 currently contains only two paragraphs on how agencies should assess the distribution of regulatory effects among population subgroups. The first paragraph recognizes that “[t]hose who bear the costs of a regulation and those who enjoy its benefits often are not the same people” and defines distributional effects as “
Transboundary Effects
Current Guidance: Circular A-4 currently contains only two sentences on the geographic scope of regulatory analysis. It states: “[An agency’s] analysis should focus on benefits and costs that accrue to citizens and residents of the United States. Where [the agency] choose[s] to evaluate a regulation that is likely to have effects beyond the borders
Conclusion
Through its approach to discounting, distribution, and transboundary effects — as well as numerous other updates — the proposed update to Circular A-4 would modernize regulatory review to be consistent with the latest available research and President Biden’s regulatory priorities. Comments on the draft are due June 6, and OIRA is expected to finali