*This post is part of a symposium on Modernizing Regulatory Review. For other posts in the series, click here.
Circular A-4 should include a mandatory process of robust and transparent pre-proposal public collaboration for rules that remain subject to review under the revised EO 12866 guidance. Multiple executive orders subsequent to EO 12866 have required more substantive collaboration with affected persons, but OIRA has yet to implement this requirement. These orders reflect the correct view that the aggregation of outside wisdom would significantly improve governmental policymaking.
We start from the proposition that regulatory development can be improved through requiring a robust collaboration at the earliest meaningful point in regulatory development, with affected stakeholders who can help shape better regulatory alternatives and related analyses to be presented in the agency proposal. This recommendation, which promotes the Biden Administration’s redoubled focus on obtaining input from marginalized or underserved communities, draws support from the 2021 ACUS recommendation on early input and literature on public participation in rulemaking. It is also informed by 27 years of implementation of the 1996 Small Business Regulatory Enforcement Fairness Act (SBREFA), a statute that expanded the role of certain interested stakeholders in the pre-proposal phase, initially by the Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA).
We advance two different versions of the required pre-proposal public input. Using the terminology employed by the 2017 ACUS report on regulatory negotiation, we advocate for the “moderate engagement” form of collaboration. This requires the agency to develop a “white paper” that describes regulatory alternatives that would satisfy agency goals and statutory requirements, along with preliminary “back of the envelope” (BOTE) analyses of costs and benefits. The agency would engage in two face-to-face meetings addressing the white paper with selected stakeholders. This moderate engagement requires fewer resources than the regulatory negotiation model, which generally requires a series of meetings of stakeholders and seeks consensus.
The first early input model we discuss is universally applicable to proposals that warrant EO 12866 interagency review, while the second model addresses the special case of regulations subject to SBREFA, for regulations at three agencies where SBREFA panels apply—EPA, OSHA, and the Consumer Financial Protection Bureau (CFPB). SBREFA panels are required where the agency is unable to certify that the proposal will not have a significant economic impact on a substantial number of entities. SBREFA already requires a robust version of pre-proposal input from representative regulated small entities, defined as small businesses, small governments and small non-profit organizations.
We believe that the SBREFA process unfairly benefits the regulated small entities, to the disadvantage of those citizens, workers, or customers potentially affected by small business—in other words, the “beneficiaries and potential beneficiaries” of the contemplated rulemakings. We wish to expand participation in the pre-proposal outreach to these parties who have been left out of SBREFA. Respectively, EPA could select citizens affected by pollution from small businesses, OSHA could select workers (unionized or not) affected by health and safety hazards at small companies they work for, and CFPB could select customers of small lenders concerned with their requirements and conditions. We do not imply that enhanced consideration of small business concerns is improper. Instead, we suggest that remedying the current asymmetry in stakeholder input will produce a better public policy result than the current SBREFA process.
Universal Robust Early Input and Dialogue (UREID) for All Significant Proposals
In the more general case of “UREID,” we envision that stakeholders who are affected by a proposal would include two sets of persons: (1) regulated entities or potentially regulated entities, and (2) beneficiaries or potential beneficiaries of a proposed rule. In other words, the agency’s initial vision of regulated entities and beneficiaries would not confine stakeholders. From the regulatory negotiation literature, we suggest that the agency use a contractor who could function as a neutral convener to help the agency identify affected stakeholders. The agency should have the final choice in picking stakeholders.
The required outreach material would be delivered via an initial and later a revised white paper, which would address the key issues, a discussion of the BOTE costs and benefits of at least two realistic alternatives other than the no-action alternative, and the need for regulation under the statute administered by the agency.
We envision two face-to-face meetings, which would include dialogue with agency officials, followed by two sets of written comments. The first paper would be the preliminary paper developed by the agency. The second paper would build on the lessons learned from the first outreach meeting’s dialogue with the agency and the written comments. By employing a two-step approach, this model incorporates the “deliberative analytic approach” promoted by previous literature. Its requirements are based largely on EPA’s approach to SBREFA implementation and the Carrigan/Shapiro BOTE paper.
The UREID model we propose would require the agency to provide transparent regulatory alternatives, containing the BOTE preliminary estimates accompanied by explanatory material. Agencies should generally delineate a minimum of two alternatives in addition to no action – any of which could reasonably be adopted by the agency. The accompanying material should include the supporting data and methodology, address the uncertainty of the preliminary cost and benefit estimates, and provide explanations in “plain English” to enable the general public and underserved communities to participate. Importantly, the agency should not merely proffer data and estimates, but forthrightly explain the underlying motivations for action, thereby facilitating a dialogue with stakeholders about agency priorities and goals.
Revelation of agency rationale and motivations has been described as “apparency” in the literature. Apparency can prove to be more important to stakeholders than transparency in public participation. Stakeholders may agree to support a decision they find adverse to their interests if its rationale is explained honestly and with empathy for the “losers” in a Kaldor-Hicks improvement.
There should be collaboration between agency staff and the stakeholders regarding statutory objectives and how they can best be achieved. These would NOT be the infamous “listening sessions,” in which agency officials can decline to engage in dialogue. Dialogue with the agency is the key part of the “moderate engagement” public participation model, and results in public input that is superior to passive listening sessions that agencies commonly employ.
In order to facilitate this process and avoid wasting agency resources, the agency must plan in advance how to integrate the pre-proposal early input into the rule development process. More specifically, it needs to identify at an early stage what the key issues are, the key uncertainties that require resolution, and how it can best utilize the stakeholders to efficiently address these issues. The Carrigan/Shapiro BOTE paper pointed out that agencies agreed that “[e]xternal stakeholders are the primary source of inspiration regarding alternative policy options when agencies are developing rules.” By using this form of structured input from the key stakeholders, the agency can ensure that it develops robust alternatives for analysis as part of the proposal.
This early input would also significantly increase the utility of the current resource-intensive, pre-proposal EO 12866 meetings. Today, these pre-proposal meetings yield little beneficial information, perhaps by design, since the participants are generally uninformed about specific agency plans. Providing significant pre-proposal input from the agencies will enable participants to offer specific constructive comments, instead of little more than inchoate complaints and unfocused pleas to remedy their grievances. Combining an early BOTE analysis of key alternatives and collaborating with the public could provide additional assurance that good analysis will precede policy decisionmaking. Finally, agencies are more likely to make sound policy decisions, including accounting for both equity and efficiency, by implementing a robust early collaboration input mechanism.
SBREFA with Beneficiaries (“SBREFA+”)
We also recommend a second version of this pre-proposal outreach that agencies adopt for SBREFA rulemakings, in order to remedy the asymmetry problem discussed above. The SBREFA process currently uses the federal panel—comprised of a regulatory agency, OIRA, and the Small Business Administration Office of Advocacy (SBA Advocacy)—to formulate a report of recommendations that are the outgrowth of the two-paper process. Small entity stakeholders are chosen by the regulating agency, with input from SBA Advocacy. This is a more complex version of the structured regulatory framework outlined above.
The SBREFA agencies should, in our view, experiment with establishing a parallel process for the beneficiaries of regulation, who are currently affected by the small businesses. This would provide separate input into the proposal development, which we designate as “SBREFA with Beneficiaries,” or “SBREFA+.” This ideally should culminate in a parallel panel report for those stakeholders by the regulating agency and OIRA. (SBA Advocacy plays no role in representing potential regulatory beneficiaries.) Just as we value the suggestions of small business owners and representatives, who generally offer changes to the proposal to significantly lower their costs without greatly reducing benefits, we should equally value the suggestions of those affected by small businesses, who may recommend proposal revisions that significantly reduce their risks and harms without greatly increasing costs.
Ideally, a separate neutral entity would help the agency choose the new “affected by” stakeholders. Those agencies that follow the panel option should receive expedited OIRA review of their draft proposed rules, since OIRA would already be a participant in the pre-proposal discussions.
In both new models, we would require that the agency share all the comments of all participants in the first round with all other participants. This, in effect, would capture reply comments, a feature that is also promoted in the literature. The beneficiaries would be able to respond to the first round of small entity representative (SER) comments in the accompanying conventional SBREFA panel, and vice versa. These opportunities alone mark a substantial advance over traditional notice and comment for the beneficiaries.
We have designed UREID to work in the general case for all rulemakings, but in the SBREFA + Panel idea, we have carefully designed the parallel dialogue process of a beneficiary panel to restore balance and retain the small entity focus.
Finally, it is possible, and these authors prefer, to hold a UREID—an all-stakeholder early input process—following the completion of the SBREFA+ process. This would combine the value of enhanced stakeholder process in all rules, including SBREFA-related rules, and would open the discussion to a host of issues that are not limited to small-business costs and benefits, while still retaining the small entity focus intended by Congress. While we appreciate the additional delay and resources attendant to a two-phase approach, we recommend this for serious consideration by the agencies.
In sum, we put forward a two-part proposal, one applicable to all agencies and all significant rules, and one also affecting those rules with current SBREFA panel processes. The UREID concept provides most of the motivation for this proposal since it applies generally to all significant rules (except the small minority covered by SBREFA) and provides a substantially robust and very broad public input mechanism composed of multiple steps, including two pre-proposal face-to-face meetings of the agency with all stakeholders, who are armed with agency-prepared BOTE analyses and explanations. The SBREFA+ concept provides some significant incremental benefits, but applies to a much smaller universe of rules. We believe both concepts would significantly advance sound public policy, with a modest resource allocation.
Kevin Bromberg is a principal at Bromberg Regulatory Strategy. He recently retired from the US Small Business Office of Advocacy, where he spent over 20 years representing the Office in more than 25 EPA SBREFA panels. Adam M. Finkel is a Clinical Professor of Environmental Health Sciences at the University of Michigan School of Public Health, as well as OSHA’s chief regulatory official in the Clinton administration, where he was co-chair of several OSHA SBREFA panels.
 We gratefully acknowledge heavy reliance on the 2017 seminal publication on BOTE analysis by Professors Carrigan and Shapiro, which outlined a scheme for early input by stakeholders, and includes a persuasive supporting analysis. We also acknowledge helpful comments on the conceptual elements of this essay from Jamie Conrad, Reeve Bull, and Jeffrey Lubbers.
 5 U.S.C § 605(b).
 5 U.S.C.§ 601.