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OMB Provides Interim Guidance on the President’s Executive Order on Reducing Regulation and Controlling Costs

February 9, 2017

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Heather Pierce, Senior Director, Science Policy & Regulatory Counsel

The Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs (OIRA) Feb. 2 provided interim guidance for agencies to implement the fiscal year (FY) 2017 requirements of the Jan. 30 Executive Order, “Reducing Regulation and Controlling Regulatory Costs” (EO).

The EO requires that for every new regulation issued “at least two prior regulations be identified for elimination, and…the cost of planned regulations be prudently managed and controlled through a budgeting process.” The EO also sets a cap of zero dollars for each department or agency for the total incremental cost of new and repealed regulations finalized in FY 2017. Additionally, beginning in FY 2018, federal agencies must provide OMB with an approximation of the total costs or savings related to each new or repealed regulation. In subsequent years, the OMB Director will identify an incremental cost allowance for each agency issuing and repealing regulations.

The Feb. 2 guidance provides additional clarification on how federal agencies should measure the “opportunity cost to society” for each regulation and notes that departments and agencies can comply with the EO by issuing “two ‘deregulatory’ actions…for each new significant regulatory action that imposes costs.” Importantly, the guidance indicates that the EO’s requirements only apply to regulatory actions issued between noon on Jan. 20 and Sept. 30, 2017 (this includes any Notice of Proposed Rulemaking issued before noon on Jan. 20) and makes clear that the EO is not applicable to independent regulatory agencies such as the Federal Communications Commission. The guidance contains Question and Answers to address additional areas in the EO including:

  • Regulations overturned by legislative activities such as the Congressional Review Act would generally be considered equivalent to agency actions;

  • The case by case treatment of new significant guidance or interpretive documents;

  • A single agency action could include both “regulatory and deregulatory” actions;

  • Emergencies or other compelling reasons could qualify for a waiver of the EO requirements for a department or agency; and

  • OMB Circular A-4 should be used to calculate costs as the “opportunity cost to society.”

OMB may revise the Q&As in the interim guidance but plans to issue additional guidance for FYs 2018 and beyond.

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