Office of Management and Budget (OMB) review of rules
Office of Management and Budget (OMB) Review of Rules
1. What is the OMB Review of Rules?
The Office of Management and Budget (OMB), through its Office of Information and Regulatory Affairs (OIRA), is tasked with reviewing significant federal regulations and rules proposed by executive agencies. This review is intended to:
Ensure regulations are consistent with the President’s policies.
Evaluate regulatory impact, including costs and benefits.
Coordinate interagency input.
Avoid duplication or conflicting regulations.
Improve the quality and effectiveness of regulations.
Legal Basis:
The Paperwork Reduction Act (PRA) of 1980 established OIRA’s role in reviewing information collection.
Executive Order 12866 (1993) further formalized OMB/OIRA review for “significant regulatory actions,” requiring cost-benefit analysis and interagency coordination.
Agencies submit draft rules to OIRA for review before publication in the Federal Register.
Process Highlights:
OIRA has 90 days to review significant rules but often completes review sooner.
OIRA can recommend revisions or withdrawal but cannot veto.
Review focuses on economics, legal consistency, statutory mandates, and public policy.
2. Importance of OMB Review
Adds an additional layer of scrutiny for regulatory quality.
Helps control regulatory burdens.
Balances agency discretion with executive oversight.
Aims to prevent economically harmful or poorly designed regulations.
Affects how agencies draft and finalize regulations.
Key Case Laws Related to OMB Review and Administrative Rulemaking
Case 1: FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000)
Facts:
The FDA sought to regulate tobacco products as drugs/devices, issuing proposed rules subject to OMB review.
Issue:
Whether the FDA had authority to regulate tobacco under the Food, Drug, and Cosmetic Act.
Holding:
The Supreme Court ruled that the FDA did not have authority to regulate tobacco products as drugs.
Relation to OMB Review:
The case highlighted the importance of clear statutory authority in agency rulemaking.
OMB review ensures regulations conform not only with policy but also statutory limits.
Case 2: Whitman v. American Trucking Associations, 531 U.S. 457 (2001)
Facts:
EPA issued air quality standards subject to OMB review.
Issue:
Whether EPA had discretion to consider costs when setting air quality standards.
Holding:
The Court held that EPA could not consider costs in setting standards under the Clean Air Act.
Significance for OMB Review:
Reinforced limits on agency discretion despite OMB’s role in cost-benefit analysis.
OMB cannot authorize agencies to ignore statutory mandates.
Case 3: FCC v. Fox Television Stations, Inc., 556 U.S. 502 (2009)
Facts:
FCC revised its policy on indecency enforcement. The new rules underwent OMB review.
Issue:
Whether FCC’s change in policy was arbitrary or capricious.
Holding:
The Supreme Court held agencies must provide reasoned explanations for changes but are entitled to deference.
Significance:
Highlights that OMB review supports reasoned decision-making.
Agencies must justify rules even under executive oversight.
Case 4: Michigan v. EPA, 576 U.S. 743 (2015)
Facts:
EPA issued regulations on mercury emissions subject to OMB review.
Issue:
Whether EPA had to consider costs before regulating power plants.
Holding:
The Court held EPA must consider costs, overruling EPA’s narrow approach.
Significance:
Strengthened the importance of cost-benefit analysis in rulemaking.
Validates OMB’s role in ensuring economic factors are considered.
Case 5: Regents of the University of California v. Department of Homeland Security, 908 F.3d 476 (9th Cir. 2018)
Facts:
DHS rescinded the Deferred Action for Childhood Arrivals (DACA) program. The rescission rule was subject to OMB review.
Issue:
Whether the rescission was arbitrary and capricious.
Holding:
The court held the rescission lacked adequate explanation and was unlawful.
Relation to OMB Review:
Demonstrates how OMB review fits into broader administrative scrutiny.
Courts expect agencies to provide thorough justification, consistent with OMB oversight.
Case 6: Public Citizen v. National Highway Traffic Safety Administration (NHTSA), 848 F.2d 256 (D.C. Cir. 1988)
Facts:
NHTSA’s fuel economy standards rule underwent OMB review.
Issue:
Whether OMB improperly delayed or influenced rulemaking.
Holding:
Court held that OMB must act within reasonable time frames but recognized its important role in reviewing regulations.
Significance:
Clarified limits on OMB’s procedural role.
Recognized OMB’s influence in shaping federal rules.
Summary and Key Takeaways
OMB/OIRA review is a critical but non-decisional step in federal rulemaking.
It ensures regulatory consistency, cost-effectiveness, and legal compliance.
Judicial review affirms that agencies must still comply with statutory mandates and provide reasoned explanations.
Courts balance agency discretion with oversight roles like OMB, ensuring accountability without unduly restricting agency expertise.
Cases highlight tensions between executive oversight and statutory limits on agency authority.
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