As of today, July 24, federal agencies are to be in full compliance with all the provisions of Executive Order 13422 (E.O. 13422), which amends the regulatory process for agencies, and the Final Bulletin for Agency Good Guidance Practices. Both documents were issued Jan. 18 and work in concert to bring significant changes to the way agencies develop and enforce public protections.

President George W. Bush issued the E.O. to amend a Clinton-era executive order in effect since 1993. The Bush E.O.:

• shifts the criterion for promulgating regulations from the identification of a problem like public health or environmental protection to the identification of "…the specific market failure (such as externalities, market power, lack of information)…that warrant new agency action";
• makes the agencies' Regulatory Policy Officer (RPO) a presidential appointment and gives that person the approval authority for any rulemaking commencement or inclusion of any rulemaking in the Regulatory Plan unless specifically authorized by the agency head;
• requires guidance documents to go through the same OMB review process as proposed regulations before agencies can issue them;
• requires "significant" guidance documents (those that are estimated to have at least a $100 million effect on the economy, among other criteria) to go through the same OMB review process as "significant" regulations; and
• requires each agency to estimate the "combined aggregate costs and benefits of all its regulations planned for that calendar year to assist with the identification of priorities," which will be overseen by the RPO.

Agencies were required to designate their RPOs by March 19. In late July, OMB released a list of RPOs for each agency. Of the 29 on the list, 27 have been confirmed by the Senate in their agency roles but not in their role as RPOs. The remaining two are political appointees who did not require any Senate confirmation.

The White House Office of Management and Budget (OMB) issued the good guidance bulletin the same day to provide directions to agencies as they develop and issue guidance documents. Agencies issue guidance documents in order to clarify regulatory obligations to industry, explain complex technical issues or otherwise offer clarification or guidance on agency policies. Agencies produce thousands of guidance documents every year.

The Final Bulletin requires internal review of significant guidance documents by senior agency officials as well as public notice-and-comment on guidance documents deemed "economically significant." These guidance documents are those judged to exceed the $100 million economic impact threshold stated in the E.O.

The OMB office with review authority is the Office of Information and Regulatory Affairs (OIRA). OIRA may review any guidance document it wishes to review. The E.O. and the Final Bulletin require OIRA to review significant guidance documents and gives the administrator the authority to define which documents are "significant."

These regulatory changes are controversial for more reasons than their timing, coming in the seventh year of the Bush presidency. OMB Watch issued a report July 24 summarizing the potential impacts of these changes on agencies' ability to issue regulations protecting public health, workplace safety, the environment and civil rights. (We issued a more comprehensive report in March entitled A Failure to Govern.) We believe the changes have real potential to further delay the issuance of regulations, distort the balance of power between Congress and the executive branch, and remove considerable discretion from agencies to implement legislative mandates to respond to public needs.

Congress has also expressed dismay at the potential harm these changes might inflict. In a series of hearings (see the links on the right), Congress heard from supporters of these amendments — the U.S. Chamber of Commerce, for example — who claimed the changes represent good government and help reign in federal agencies. Congress also heard from a range of advocacy groups (including OMB Watch), former government officials and administrative law experts who said these changes may be unconstitutional, usurp both agency and congressional responsibilities, add more delay to an ossified process and further centralize authority in the executive branch.

On June 28, the House passed the Financial Services and General Government Appropriations Act, FY 2008 (H.R. 2829). The bill contains an amendment that prevents the White House from expending any funds in implementing the E.O. and the Final Bulletin.

The Senate also considered defunding language for its version of the FY 2008 appropriations bill. Language that would have prevented the use of funds in implementing both the E.O. and the Final Bulletin was included when an appropriations subcommittee considered the bill. However, the language was later removed when it reached the full Appropriations Committee.

When the House and Senate meet in conference to resolve differences in the two appropriations bills, the House language preventing implementation of the E.O. and the Final Bulletin will be addressed. Bush has threatened a veto over other spending issues in the bill.