The President’s recent Executive Order on reducing regulation and controlling regulatory costs represents the greatest potential change in federal regulatory policy since President Reagan’s 1981 Executive Order on federal regulation first provided for White House oversight of the regulatory process.

The Order requires three main things, with certain exceptions:

  • whenever a federal agency proposes a new rule, it will need to identify two existing rules to be eliminated in order to offset the cost of the new rule;
  • the total incremental cost of all new rules in fiscal year 2017 must be no greater than zero; and
  • from fiscal year 2018 onward, the OMB Director will establish annual regulatory budgets capping the total amount of incremental costs that each agency will be allowed when issuing and repealing rules.

The regulatory cost cap for fiscal year 2017 contributed to the freeze on most rulemaking activities through the end of September. Going forward, it also makes the Office of Information and Regulatory Affairs (OIRA) more powerful, since it is OIRA’s decision which rules to review and, thus, which rules are subject to the annual agency-specific regulatory cost caps beyond FY 2017. At least in the early years of the Trump regulatory program, OIRA will have a great degree of new discretion over agency actions, as the ground rules for the process are worked out on a case-by-case basis.

At its core, the Trump Executive Order and related OMB guidance incentivize agencies to find ways to cut costs since, in general, taking deregulatory action that reduces overall costs will provide the only path forward if they want to promulgate new rules that impose costs. As a result, the Order could enable ambitious initiatives to eliminate unnecessary costs, including those that would streamline regulation, permitting, and information collection; promote the use of private sector standards and conformity assessment schemes; and encourage U.S. regulators to engage in cooperation with their foreign counterparts as a normal course of business. Strong and sustained engagement by the private sector with the Administration will be essential to ensuring that implementation of the Order supports such initiatives.

Venable will continue to monitor this issue as rules begin to appear on OIRA’s dashboard, as OIRA issues additional guidance about the implementation of the President’s Order, and as new executive actions and policies are announced.