Public Comment on OMB’s Interim Guidance Implementing Section 2 of the Executive Order Titled “Reducing Regulation and Controlling Regulatory Costs”

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by Susan E. Dudley, Brian F. Mannix, Sofie E. Miller, & Daniel R. Pérez
February 13, 2017

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The George Washington University Regulatory Studies Center improves regulatory policy through research, education, and outreach. As part of its mission, the Center conducts careful and independent analyses to assess rulemaking proposals from the perspective of the public interest. This comment on the Office of Management and Budget’s interim guidance implementing Executive Order 13771 does not represent the views of any particular affected party or special interest, but is designed to improve both regulatory processes and regulatory analysis.

Introduction

On January 31, President Trump signed Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” which instructs agencies to identify two regulations for removal for each new rule they propose and to limit incremental regulatory costs to $0 in fiscal year (FY) 2017.[3] In response to this Executive Order (EO), the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) issued an interim guidance document for executive branch agencies to clarify the scope and implementation of its provisions.

OMB’s interim guidance targets Section 2 of the EO, which includes the following requirements:

Sec 2(a) “Unless prohibited by law, whenever an executive department or agency… publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed.”

Sec 2(b) “For fiscal year 2017, []the heads of all agencies are directed that the total incremental cost of all new regulations, including repealed regulations, to be finalized this year shall be no greater than zero, unless otherwise required by law or consistent with advice provided in writing by the Director of the Office of Management and Budget…”

Sec 2(c) “In furtherance of the requirement of subsection (a) of this section, any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.”

The guidance, which is structured in a question-and-answer format, provides answers to 23 questions pertaining to EO 13771, listed below. Note that in the original guidance the questions are not numbered; we have added the numbering below, and our first recommendation is that OMB adopt it!

This comment offers some general observations and provides recommendations on questions 1, 2, 4, 5, 8, 9, 10, 12, 17, 19, 20, 21, and 22.

Interim Guidance Questions and Answers

1.      Which new regulations are covered?

2.      What about rules that implement Federal spending programs?

3.      Do Section 2’s requirements apply to significant regulatory actions of independent agencies?

4.      Are new guidance/interpretive documents covered?

5.      Which existing regulatory actions, if repealed or revised, would be considered deregulatory actions, and thus qualify for savings?

6.      Do regulatory actions issued before January 20 that are vacated or remanded by a court after that date qualify for savings?

7.      Do regulatory actions overturned by subsequently enacted laws qualify for savings?

8.      How should costs be measured?

9.      How should agencies account for deregulatory actions that do not outright repeal existing regulations but revise existing requirements to produce real cost savings?

10.  Can effects such as future energy cost savings for rules that require the adoption of more energy efficient technologies be counted against the compliance costs of a regulatory action for purposes of Section 2(b) of the EO?

11.  What about costs that occur over different time periods?

12.  Can agencies use previously estimated costs from an original Regulatory Impact Analyses (RIA) in determining the cost savings generated by an eliminated regulatory action?

13.  What costs of existing regulatory actions should be counted as cost savings from a deregulatory action?

14.  How should costs that duplicate those in another regulatory action be addressed?

15.  How should agencies treat unquantified costs and cost savings?

16.  Which significant regulatory actions might qualify for individual waivers?

17.  Can regulatory and deregulatory actions be bundled in the same regulatory action?

18.  What must agencies do to “identify” existing regulatory actions to be repealed?

19.  Do deregulatory actions have to be finalized before new regulatory actions can be finalized?

20.  How does this EO interact with other EOs and guidance addressing regulatory activities?

21.  Can savings be transferred within an agency?

22.  Can savings be transferred from other agencies?

23.  How does the regulatory cost cap in Section 2 of the EO affect the consideration of regulatory benefits or other requirements under EO 12866?

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[3]   Section 3 of the order sets forth regulatory planning and budgeting practices for FY 2018 and beyond. Neither OMB’s interim guidance nor this comment address that section.