February 9, 2017
White House Office of Management and Budget Issues
Guidance on the “2 for 1” Executive Order; Lawsuit Follows
On Feb. 2, the Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs
(OIRA) issued interim guidance addressing President Trump’s Jan. 30 executive order (EO) requiring
agencies to “identify at least two existing regulations to be repealed” for every newly proposed regulation as
well as regulatory offset requirements relating to new, significant regulatory actions that impose costs. The
interim guidance clarifies that agencies will be in compliance with the requirements of the EO by issuing two
“deregulatory” actions for each new regulation issued. OIRA’s interim guidance is open for public comment
through this Friday, Feb. 10.
The guidance memo addresses the following issues:
•
Agencywide scope of the EO: The interim guidance clarifies that the EO requirements apply
“agency-wide” — meaning that regulatory savings by a component in one agency can be used to offset
a regulatory burden by a different component in that same agency. The guidance states that offsets
may not be transferred between different agencies, unless a written request is submitted to the
Director of OMB and OMB concurs with the request.
•
Limitation to “significant regulations”: The 2-for-1 EO’s requirements are limited to
“significant” regulations, meaning regulations that impose an annual economic cost of $100 million
or more, based on the “significance determination process” outlined in pre-existing EO 12866. The
requirements of the 2-for-1 EO will apply to new significant guidance or interpretive documents on a
case-by-case basis.
•
Definition of a “deregulatory action”: Under the guidance, a regulation is considered
“deregulatory” if it imposes costs and will produce savings if repealed. The guidance further states
that the deregulatory actions should be eliminated before or on the same schedule as the new
regulatory action to the extent feasible. If that is not possible, the agency should document a plan for
finalizing the offsetting regulation and may again do so in the preamble of the rule being issued.
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•
Determining the cost of regulations proposed for elimination: The OMB guidance directs
agencies to use the opportunity cost to society, as defined in separate, pre-existing OMB guidance. In
general, agencies are instructed to use the most current information available rather than relying on
any previous cost estimates done for regulatory impact purposes.
•
Exemptions: Certain types of regulations are exempt from the 2-for-1 EO’s requirements or may be
eligible for a waiver. According to OMB’s interim guidance:
o
Exemptions from the EO requirements include regulations affecting only other federal
agencies (and not the public); those affecting independent agencies; those related to agency
organization, management or personnel; and those issued with respect to a military, national
security or foreign affairs function of the United States.
o
Certain emergency regulations addressing “critical health, safety or financial matters” may be
eligible for a waiver from some or all of the 2-for-1 requirements, as discussed further in the
guidance.
o
Significant regulatory actions that must be finalized in order to comply with an imminent
statutory or judicial deadline may be permitted to be issued before two deregulatory actions
are identified. The guidance states, however, that the offsetting must occur at some point,
even if it does not occur by the time of the issuance of a regulation to meet an imminent
statutory or judicial deadline.
Because OMB is seeking comment and the guidance is identified as “interim” only, future updates to the
guidance may be forthcoming.
Lawsuit Filed in Federal Court
On Feb. 8, three organizations — Public Citizen, Natural Resources Defense Council and Communications
Workers of America, AFL-CIO — filed a federal lawsuit to challenge both the 2-for-1 EO and the interim
OIRA guidance. The suit alleges that (1) the EO exceeds the President’s constitutional authority and (2) the
EO and implementing guidance are “arbitrary, capricious, an abuse of discretion, and not in accordance with
law” because they take into account only the costs and not the benefits of new and existing regulations. The
lawsuit was filed in the U.S. District Court for the District of Columbia.
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