As we reported in our last issue, shortly after incoming Governor Charlie Baker was sworn in earlier this year, his Secretary of Administration and Finance issued a memo imposing a temporary three-month freeze on new state regulations while his administration evaluated existing requirements and budgetary issues.
On March 31, 2105, Governor Baker extended that freeze in a dramatic fashion, issuing a sweeping Executive Order 562 that is almost revolutionary in its impact on the regulatory authority of state administrative agencies. The executive order, which remains in effect for one year, prohibits any agency from issuing new regulations during that one-year period unless the new rules meet certain criteria described below and requires all executive agencies to sunset their regulations by March 31, 2016, such that “only those regulations which are mandated by law or essential to the health, safety, environment or welfare of the Commonwealth's residents shall be retained or modified.”
For the citizens and businesses of Massachusetts, where state agencies have a long history of expansive regulatory programs, aggressive rule development, and sweeping administrative authority, this is an extraordinary measure, and it will undoubtedly reshape state government programs for many years to come.
The executive order requires that any state agency proposing a new regulation must demonstrate that the regulation will satisfy seven criteria:
- There is a clearly identified need for governmental intervention that is best addressed by the Agency and not another Agency or governmental body;
- The costs of the regulation do not exceed the benefits that would result from the regulation;
- The regulation does not exceed federal requirements or duplicate local requirements;
- Less restrictive and intrusive alternatives have been considered and found less desirable based on a sound evaluation of the alternatives;
- The regulation does not unduly and adversely affect Massachusetts citizens and customers of the Commonwealth, or the competitive environment in Massachusetts;
- The Agency has established a process and a schedule for measuring the effectiveness of the regulation; and
- The regulation is time-limited or provides for regular review.
Further, the order provides that every regulation must be clear, concise and written in plain and readily understandable language.
Under the executive order, any agency proposing a new regulation must prepare and submit to its cabinet secretary a business/competitiveness impact statement that will include a competitiveness review and an assessment of disruptive economic impacts on small businesses and other entities. If the cabinet secretary approves of the proposal, it must then be submitted to the Secretary of Administration and Finance, who is to develop a public input process.
In addition, the executive order requires state agencies to undertake a review of every existing regulation within their jurisdiction, and requires them to sunset those regulations by March 31, 2016 unless the agencies find that the regulations are mandated by law or essential to health, safety, environment, or welfare. In order to find that regulations satisfy this standard, an agency carries the burden to demonstrate that they meet the seven criteria set forth above.
This dramatic executive order tells us Governor Baker is intent on remaking Massachusetts government and in repositioning the state in its interactions with the regulated community. The press release accompanying the order speaks of wanting to ensure that government provides exceptional customer service and helping to spur job creation and business development. Secretary of Administration and Finance Kristen Lepore is quoted as saying: “We will ensure that all regulations administered by the Executive Department benefit the Commonwealth without undue burdens or costs and serve a legitimate purpose in making Massachusetts a safe, healthy, and effective place to do business.”
In just three short months, the new governor has embarked on a substantial reevaluation of the role that state government plays, and the authority that state agencies exercise. We do not yet know the impact that this new approach will have on the administration of environmental programs in Massachusetts. As yet unknown is how the Governor will exercise the exception in the executive order allowing for new and existing rules essential to health, safety, environment, or welfare. Also unknown is how the administration will balance environmental programs with the cost-benefit and business impact provisions in the executive order. We also do not know what effect public review and comment will have on the new rule review process to be conducted by Administration and Finance.
What we can promise is that the next several years will certainly be a fascinating journey for those with strong views about the impact of environmental regulations.