On January 30, President Trump signed an Executive Order (number to be determined) establishing new principles for the exercise of statutory discretion by Executive branch agencies. The Order directs agencies “to manage the costs associated with the governmental imposition of private expenditures required to comply with Federal regulations” (Sec. 1), caps net regulatory costs for FY 2017 at zero and requires agencies to rescind at least two existing regulations for each new regulation promulgated (Sec. 2), and establishes a process whereby the Office of Management and Budget would establish a regulatory budget for each agency (Sec. 3(d)).
Sec. 1: Purpose
The stated purpose of this Order is substantively very different from the purposes of regulatory Executive Orders signed by President Clinton in 1993 (12866) and President Reagan (12291) in 1981. What all three Executive Orders have in common, however, is the belief that the status quo ante was unacceptable. The stated purpose of EO 12291 was “reduce the burdens of existing and future regulations, increase agency accountability for regulatory actions, provide for presidential oversight of the regulatory process, minimize duplication and conflict of regulations, and insure well-reasoned regulations.” The stated purpose of EO 12866 was to create “a regulatory system that works for [the American people] not against them.” The Trump EO implies similar misgivings with respect to past regulatory policies, stating that “it is essential to manage the costs associated with the governmental imposition of private expenditures required to comply with Federal regulations.”
Sec. 2. Regulatory Cap for Fiscal Year 2017
Subsection (a) directs federal agencies to identify at last two regulations to be rescinded for every new regulation promulgated. Subsection (c) elaborates, stating “any new incremental costs associated with new regulations shall … be offset by the elimination of existing costs associated with at least two prior regulations.” This is a not a natural interpretation of the two-for-one requirement set forth in subsection (a), but it is easier to understand and implement than any other counting rule. Subsection (d) directs OMB to issue implementation guidance on such matters as
processes for standardizing the measurement and estimation of regulatory costs; standards for determining what qualifies as new and offsetting regulations; standards for determining the costs of existing regulations that are considered for elimination; processes for accounting for costs in different fiscal years; methods to oversee the issuance of rules with costs offset by savings at different times or different agencies; and emergencies and other circumstances that might justify individual waivers of the requirements of this section.
The EO does not say whether the term “agency” applies to the Executive branch or includes independent agencies as well. The extension of centralized review by OMB to independent agencies has been discussed for many years.
Subsection (b) directs federal agency heads to ensure that “the total incremental cost of all new regulations, including repealed regulations, to be finalized this year shall be no greater than zero,” with exceptions to be provided by the OMB Director. This is functionally equivalent to a regulatory budget. (The text purports also to exempt regulations “otherwise required by law,” but this appears to be boilerplate. Any regulation required by law to be promulgated could in principle be offset by two regulations that are not required by law to remain.)
Sec. 3. Annual Regulatory Cost Submissions to the Office of Management and Budget
Subsection (a) directs agency heads to identify the regulations that will be rescinded to offset new regulations promulgated. The EO delegates to each agency the responsibility for estimating “the total costs or savings associated with each new regulation or repealed regulation.” The remainder of this section integrates regulatory budgeting into the annual budget process.
The EO does not give OMB the explicit authority to override these estimates if it believes they are incorrect. If OMB does not have this authority, this Section and the regulatory budget provision in Sec. 2(b) will fail.
Also, the integration of regulatory budgeting into the fiscal budgeting process will create conflict between the OMB’s Office of Information and Regulatory Affairs and OMB’s budget examination corps. The latter can be expected to prevail in any competition between Federal budgeting (which has an established statutory foundation and procedures) and regulatory budgeting (which does not).
Sec. 4. Definition of “Regulation” or “Rule”
This definition is different from the definition in EOs 12291 and 12866 because it includes more than rules of general applicability:
|Executive Order||Definition of “Regulation” or “Rule”|
|12291||“agency statement of general applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the procedure or practice requirements of an agency”|
“agency statement of general applicability and future effect, which the agency intends to have the force and effect of law, that is designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency”
“agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency”
The revised definition does not include agency guidance, even if such guidance has substantial regulatory content.