White House issues guidance on two-for-one policy
Posted February 10, 2017
A recent White House memorandum to regulatory policy officers at executive departments and heads of federal agencies provides interim guidance on implementing Section 2 of the January 30, 2017, Executive Order (EO) titled, “Reducing Regulation and Controlling Regulatory Costs.” The EO laid out the new administration’s policy of slashing two regulations for every new regulation introduced.
The interim guidance, presented in question-and-answer format, explains the following requirements:
- Unless prohibited by law, whenever an agency begins the new rulemaking process, it must identify at least two existing regulations to be repealed.
- The total cost of all new regulations, including repealed regulations, finalized in 2017 must be zero, unless required by law or waived by the Director of the Office of Management and Budget (OMB).
- Any new incremental costs associated with new regulations must be offset by the elimination of existing costs associated with at least two prior regulations.
According to the guidance, executive departments and agencies may comply with the new requirements by issuing two “deregulatory” actions for each new significant regulatory action that imposes costs. The savings of the two deregulatory actions must fully offset the costs of the new significant regulatory action.
Further, the guidance directs agencies planning to issue one or more significant regulations on or before September 30, 2017, to:
- Identify the two existing regulations the agency plans to eliminate or propose for elimination on or before September 30, 2017, and
- Fully offset the total cost of such new significant regulatory actions as of September 30, 2017.
OMB said it intends to issue further guidance on applying the EO for Fiscal Years 2018 and beyond.
Key takeaways contained in the guidance
Agency heads should consult with the OMB before issuing new significant guidance or regulatory interpretations. These documents will be addressed on a case-by-case basis. Agencies should clarify that compliance with any agency guidance is voluntary. Further, any cost savings claimed for guidance or other documents must be “specific and verifiable.”
“Deregulatory actions,” are defined as the repeal or revision of any existing regulatory action that imposes costs and which will produce verifiable savings. Also, “meaningful burden reduction through the repeal or streamlining of mandatory reporting, recordkeeping, or disclosure requirements may also qualify.” Agencies should confirm that they will continue to meet their regulatory objectives after undertaking deregulatory action.
Generally, regulations issued before January 20, 2017, that have been vacated or remanded by a court do not qualify as deregulatory actions under the EO. However, there may be individual cases that could be counted toward an agency’s cost savings target.
On the other hand, regulations overturned by Acts of Congress will qualify as deregulatory actions.
Certain significant regulatory actions “might qualify” for individual waivers. These include emergencies addressing critical health, safety, or financial matter, or other compelling reason. Agencies should send waiver requests to the OMB.
Agencies may proceed with significant regulatory actions that need to be finalized to comply with an imminent statutory or legal deadline, even if they are not able to identify offsetting deregulatory actions.
Regulatory and deregulatory actions may be “bundled” in the same regulatory action, but the agency must clearly identify the specific provisions that are counted within the regulatory and deregulatory portions of the rules and the costs and costs savings associated with each.
The agency should identify all of the associated regulatory actions to be repealed, along with cost savings estimates, no later than the date of issuance of the corresponding new regulation. All of the regulatory actions scheduled for repeal must also be included in the Unified Regulatory Agenda.
To the extent feasible, regulatory actions should be eliminated before or on the same schedule as the new regulatory actions they offset. Where this is not possible, the agency should provide a plan for finalizing the offsetting regulation.
EO applies agency-wide
Note that the requirements of the EO apply agency-wide. This means regulatory savings by a component in one agency can be used to offset a regulatory burden by a different component in the same agency.
Additionally, agencies that are not able to generate sufficient savings to account for new regulatory actions may submit a written request to the OMB to transfer savings from one agency to another before they submit an action for review.
Already in the courts
On February 8, 2017, several environmental and worker advocacy groups sued the Trump administration in the U.S. District Court for the D.C. Circuit. The plaintiffs asked the court to block the EO and tell the federal agencies not to abide by it.
According to the groups, the EO is unlawful because agencies cannot comply with the order without violating the statutes under which they operate. For instance, the Clean Air Act requires the EPA to establish emissions standards and to review and update the standards to meet statutory criteria and stay in line with technological advances. Under the Clean Air Act, EPA promulgated the national ambient air quality standards (NAAQS), which prohibits EPA from considering costs when setting air quality standards.
In addition, the groups argue the EO countermands the Administrative Procedure Act.
As part of the lawsuit, the groups also want the court to declare the OMB interim guidance unlawful and set it aside.
J. J. Keller's OSHA Compliance for General Industry manual is your single source for real-world OSHA compliance guidance.
J. J. Keller's FREE Workplace SafetyClicks™ email newsletter brings quick-read workplace safety and compliance news right to your email box.