OMB Likely to Field Many Questions on Regulation Order

The Office of Management and Budget (OMB) is likely to get many questions on the Trump administration’s executive order on reducing regulations, according to attorneys Laurence Platt and Joy Tsai (both Mayer-Brown). Writing in an online legal update, the two say that while many people may see a “simple elegance” in President Donald Trump’s order that executive agencies repeal two regulations for every new regulation they want to impose, “its actual implementation is a lot messier.”

The two look at the regulatory actions that would be subject to the executive order and the issues in implementing the order. 

•          The update says that the order doesn’t apply to independent agencies, although they are encouraged to identify existing regulations that, if repealed or revised, would achieve cost savings that would fully offset the costs of new significant regulatory actions. The order generally targets regulations, which it defines as agency statements 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. An interim guidance from OMB seeks to narrow the order’s language to “significant regulatory actions,” which it defines through a number of criteria.
•          The “two-for-one” order would apply to an executive agency’s significant regulatory action not otherwise excluded by the interim guidance “unless prohibited by law.” The update notes that two public interest firms and one union have filed suit seeking to have the order and interim guidance declared unconstitutional because it directs agencies to focus on costs while ignoring benefits to people whom Congress enacted laws to protect.
•          Agencies subject to the order “would have significant difficulty calculating regulatory cost as directed,” the attorneys write. The interim guidance says that cost “should be measured as opportunity cost to society,” they say. “The test of ‘opportunity cost to society’ is a soft, amorphous, and inherently subjective analysis that appears to bear little relationship to the actual dollar cost of a business to comply with a regulation,” the paper says. “This calculation has to be made on the ‘front end’ in determining the costs of the new regulation and on the ‘back end’ in determining the costs of the two regulations to be repealed. Perhaps this is the desired goal, but the ability of an agency actually to make these calculations in real life will be challenging at best and hard to validate.”

The one definitive solution for agencies facing issues complying with the order is to contact OMB, the update says. “Given the ambiguities of the order and the challenges of complying with the zero-cost provision, OMB is likely to receive many calls over the next year.”