New Guidance, OMB Official Explain Trump Regulatory Order

By Cheryl Bolen

The Office of Management and Budget is providing more guidance and designating an official to answer questions about an executive order signed by President Donald Trump that requires agencies to eliminate two regulations for every one they issue.

Late April 5, the OMB’s Office of Information and Regulatory Affairs issued the substantially revised and extended guidance document as agencies begin implementing the executive order. It is aimed at reducing regulation and controlling regulatory costs.

The new material in the guidance resulted from a public comment period following the publication of an interim guidance document Feb. 2.

In addition, Marcus Peacock, a temporary senior adviser assigned to OMB, spoke at length about the order at an April 5 event hosted by Resources for the Future, an environmental research organization.

Facing Skeptics

Peacock, a former associate director at OMB in the George W. Bush administration, answered questions from a panel skeptical about the president’s order and worried about cutting regulatory benefits.

“There’s a lot of concern, I think, in this room and around the regulatory community that this order—despite your disclaimer that it is not undermining benefits—is in fact undermining benefits,” said Richard Morgenstern, a senior fellow at RFF.

The bottom line is that any deregulatory action must be reviewed under the old Executive Order 12,866, which requires rules to maximize net benefits, Peacock said. A rule that meets that test and maximizes net benefits simply would not be a candidate for elimination, he said.

This is one reason why retrospective review is so tantalizing, because there is a tremendous opportunity to both improve benefits and reduce costs of the regulatory stock in this country, Peacock said.

Regulators have done a poor job for decades in going back and looking at the rules they have issued, Peacock said.

In 2011, then-President Barack Obama launched a government-wide review of existing regulations, known as retrospective review. Five years later, in August 2016, OIRA reported about 70 regulatory provisions had been eliminated, at a cost savings of $37 billion.

Improving Old Rules

Another factor is that over time, conditions have changed, Peacock said.

“The regulations may have been perfectly fine and maximized net benefits when they were promulgated, but that probably is not going to be true for a lot of rules now,” Peacock said.

In other countries with a similar system, such as Canada or the U.K., most of the regulatory cost savings comes from administrative and paperwork burdens, Peacock said. In this country, the opportunities to reduce administrative burdens through information technology alone are tremendous, he said.

“To me, as I have these discussions, it gets down to whether or not you start with the belief that there’s a tremendous opportunity to improve . . . all that [Code of Federal Regulations] that’s on the shelf or not,” Peacock said.

“I just think there is, I think the president thinks there is, I think a lot of people think that there’s an opportunity [to improve].”

Expanded Guidance

The OMB’s new guidance document defines more terms and contains more detailed answers to questions about the order.

Among the changes, significant interpretive guidance issued by agencies is subject to the requirements of the executive order. This means that for every new interpretive guidance that imposes costs, the agency must take at least two deregulatory actions and ensure the costs are completely offset.

The document also states that if an agency is not in full compliance with the requirements of the order at the end of the fiscal year, it must submit a report to the OMB director within 30 days explaining the reasons for that, as well as how and when it will come into compliance.

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