The executive order requires at least two regulations be slashed to offset the costs associated with new regulations. For the current fiscal year, the order applies to significant regulatory actions, and the allotted cost for new regulations is set at zero.
To close out the first month of 2017, President Trump signed an executive order requiring at least two prior regulations be repealed for every new regulation issued by a federal department or agency. Citing the need to be financially responsible in the expenditure of funds and to carefully manage the cost of planned regulations, the order states the cost of new regulations must be fully offset by the elimination of existing costs associated with two previous regulations.
Beginning in FY2018, the order requires that regulatory plans submitted by federal agencies to the Office of Management and Budget (OMB) identify, for each regulation that increases incremental cost, the offsetting regulations and provide an estimation of the total costs or savings associated with the new or repealed regulations. During the budget process, the OMB will provide agencies with a total amount of incremental costs permitted. For FY2017, the order sets the total incremental cost of new regulations at zero. No regulations surpassing the cost allowance will be allowed, unless required by law or approved by the OMB director. Regulations approved during the budget process will be included in the Unified Regulatory Agenda. No regulation may be issued that’s not included in the agenda, unless approved by the OMB director.
The order defines regulation or rule as “an 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.” It notes, however, that it does not include regulations related to the military, national security or foreign affairs; regulations related to agency organization, management or personnel; or any other category of regulations exempted by the OMB director.
Following publication of the order, the OMB issued guidance to help federal agencies ascertain how the order applies to their issuance of guidance or rules. The guidance indicates that order requirements apply only to significant regulatory actions in FY2017, defined by Executive Order 12866 as any action likely to result in a rule that may:
- Have an annual impact of $100 million or more on the economy or negatively impact the economy in a material way.
- Establish a serious inconsistency or interfere with an action taken or planned by another agency.
- Materially modify the budgetary impact of entitlements, grants, user fees or loan programs.
- Bring to light new legal or policy issues arising from legal mandates, the president’s priorities or the principles of the order.
As an example, significant regulatory actions taken by the FDA in the past year include final and proposed rules related to:
- Postmarket safety reporting for combination products.
- Revisions to medical device and biologic labeling regulations.
- The implementation of provisions in the Medicare Prescription Drug, Improvement and Modernization Act of 2003 related to the approval of 505(b)(2) applications.
- ANDAs and revisions to the list of drugs withdrawn or removed from market due to safety or efficacy concerns.
Agencies planning to issue one or more significant regulatory actions are directed to identify deregulatory actions to eliminate to fully offset the incremental costs as of Sept. 30, 2017. Per the guidance, any existing regulatory action that imposes cost and that would produce verifiable savings if eliminated may qualify as a deregulatory action. Regulations voided by a court will generally not count, though there may be instances in which the savings may be counted. The guidance indicates that new significant guidance or interpretive documents will be addressed on a case-by-case basis and directs agencies to ensure documents are the appropriate method for the policy goal.