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OMB Issues Guidance Implementing "One-In, Two-Out" Executive Order

Prepared for the Katten Environmental Advisory Group
Advisory | February 7, 2017

On February 2, 2017, the Office of Management and Budget (OMB) issued guidance implementing President Trump's recent Executive Order (EO) aimed at reducing federal agency regulations. See OMB, Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017, Title 'Reducing Regulation and Controlling Regulatory Costs' (Feb. 2, 2017) (Guidance). For every new significant regulatory action, executive departments and agencies must identify two or more "deregulatory actions," or existing regulatory actions that impose costs, the repeal or revision of which would produce "verifiable savings in cost burden." These deregulatory actions must be identified, along with cost savings estimates, no later than the date of issuance of the significant new regulatory action. The Guidance further provides that agencies "should also confirm that they will continue to achieve their regulatory objectives after the deregulatory action is undertaken."

The Guidance requires that there be zero incremental cost of new regulations, including repealed regulations, for fiscal year 2017. The Guidance explains that the cost savings of the two deregulatory actions together must offset the costs of the new significant regulatory action, and addresses specific questions about how the OMB will account for and measure cost savings. Notably, agencies will not be able to rely on previously estimated costs from an original Regulatory Impact Analysis in determining the cost savings generated by eliminating a regulatory requirement.

The Guidance requirements apply only to "significant" regulatory actions issued between January 20, 2017, and September 30, 2017. Significant regulatory actions are defined by a previous executive order issued during the Clinton administration regarding regulatory planning and review to include:

  • Have annual effect on the economy of $100 million or more or adversely affect the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities in a material way;
  • Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;
  • Materially alter the budgetary impact of entitlements, grants, user fees or loan programs or the rights and obligations of recipients thereof; or
  • Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or principles set forth in Executive Order 12866 (regarding regulatory planning and review).

Executive Order 12866 (Oct. 1993). According to the Guidance, significant agency guidance or interpretive documents may qualify as significant regulatory actions and will be addressed by OMB on a case-by-case basis.

The Guidance exempts certain regulations, including:

  • Regulations that affect only other Federal agencies and not the public;
  • Regulations issued with respect to a military, national security, or foreign affairs function of the United States; and
  • Regulations that are related to agency organization, management, or personnel.

Additionally, the Guidance explains that federal spending rules are generally not covered, nor are significant regulatory actions of independent regulatory agencies as defined in Executive Order 12866, such as the National Labor Relations Board and the Occupational Safety and Health Review Commission. Agencies may request a waiver from these requirements for emergencies addressing critical health, safety, financial, or national security matters, or for some other compelling reason. Additionally, agencies may proceed with significant regulatory actions that need to be finalized in order to comply with imminent statutory or judicial deadlines, even if they are not able to identify offsetting regulatory actions by the time of issuance. However, agencies should still identify deregulatory actions even when the new significant regulatory action is required by law.

OMB indicates that it plans to issue further guidance regarding the application of the EO for fiscal years 2018 and beyond in the near future.

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