Details Regarding Agency Rulemaking Reviews

Published: February 11, 2021

Federal Market AnalysisAdministration TransitionOMBPolicy and Legislation

On his first day in office, President Biden issued a memorandum to the heads of executive departments instructing them to put a temporary freeze on any new or pending rules in order to give his appointees an opportunity to review the rules.

Key Takeaways:

  • New agency leadership and OMB will be reviewing new and pending rules.
  • The effective date for some of these rules may be extended for purposes of the review process.

On the same day, OMB released a memo with specific guidance on how to go about implementing the president’s memorandum.

The president’s executive memorandum issued on January 20th, entitled “Regulatory Freeze Pending Review,” asked agencies to take the following immediate steps:

  1. Do not propose or issue a rule until a presidentially appointed or designated agency head reviews or approves the rule.
  2. Immediately withdraw any rules that have been sent to the Office of the Federal Register (OFR), but have not been published.
  3. For rules that have already been published but not take effect, consider postponing the effective dates for 60 days, as well as opening a 30-day comment period. 
  4. Consult with OMB on rules that “raise substantial questions of fact, law, or policy.” OMB will implement a regulatory review on questionable rules.

The president’s memo notes the possibility of modification or extension of the memorandum if actions that were taken before noon on January 20, 2021 “frustrate the purpose underlying” the memo.

OMB’s memo provides more clarity and additional guidance for the following action items in the president’s memo:

  • Actions Related to the Federal Register and OMB’s Office of Office of Information and Regulatory Affairs (OIRA) - These instructions apply to rules that have been sent to the Office of the Federal Register (OFR), but have not yet been published.
    • Agencies should immediately withdraw all of these rules from being published, so that they may be reviewed.  
    • OMB’s memo explains in detail how to properly withdraw such rules from publication depending on whether or not they were filed for “public inspection.”
    • Agencies are also further instructed not to send additional “rules to the OFR until an agency head appointed or designated by the president reviews and approves the rule.”
  • Postponement of Effective Dates of Certain Published Rules - These instructions apply to rules that have been published but have not taken effect.
    • The agency should evaluate each rule that has not yet taken effect with a list of eight criteria provided by OMB.
    • If these rules raise questions involving law, fact, or policy, the agency should consider postponing the effective dates for 60 days and reopen the rulemaking process.
    • The agency should provide OMB with a list of these rules.
    • For rules that require further review, the agency should open a 30-day public comment period.
    • Following the comment period, the agency should take appropriate steps to ensure fair evaluation of whether to extend the effective date and whether to amend the rule in question.
  • Exceptions – Following are exceptions to OMB’s instructions:
    • If the rule is “for emergency situations or other urgent circumstances.” This includes rules to address the continued health or economic consequences of COVID-19 Pandemic Public Health Emergency.
    • If the rule is “subject to statutory or judicial deadlines.”
    • Agencies are to provide OIRA a list of the rules that meet these exceptions.
  • Paperwork Reduction Act (PRA) Review
    • As part of the PRA, OMB reviews information collected by agencies pertaining to rules published in the Federal Register, usually those requesting public comments.  
    • Agencies may want to analyze information currently pending OMB review as part of their evaluation of the rules being evaluated.
    • Agencies should promptly inform OIRA of any pending submissions that “raise substantial questions of law, fact, or policy,” for coordination purposes.

Contractors should be aware of any new or pending contracting rules that may be extended or undergoing further review by agencies that could affect current or future projects.