White House Thinking on Regulatory Budget Still Developing

By Cheryl Bolen

Practical questions surround the implementation of President Donald Trump’s executive order on regulation, even as the White House is still developing its regulatory goals for this administration.

Scholars, practitioners, and congressional staff packed a Senate hearing room June 8 to learn about the president’s Executive Order 13,771 on reducing regulation and controlling regulatory costs, signed Jan. 30, which establishes a mechanism for capping regulatory costs.

Panelists participating in the discussion on the executive order and regulatory budgeting, hosted by the Mercatus Center at George Mason University, included Paul Winfree, director of budget policy at the White House.

“There are multiple goals of the deregulation effort, or the better regulation effort,” Winfree said. One of the major goals of the administration is to “right-size” government, to reduce both the size and scope of government, but also its footprint, he said.

Still Untested

Broadly, EO 13,771 requires agencies to take two deregulatory actions for every new rule they issue. The order also requires agencies in fiscal year 2017 to completely offset the cost of the new rule through cuts in existing rules.

The requirements of the executive order apply to rules finalized in this fiscal year that impose costs. It is unclear whether, or how many, rules currently pending at the Office of Information and Regulatory Affairs (OIRA) would do that.

Identifying those rules is complicated because rules often change during OIRA review. Further, a rule proposed now is unlikely to be finalized until next fiscal year, which begins Oct. 1.

The executive order also contemplates that regulatory “caps” for each agency will be established by the director of the Office of Management and Budget for FY 2018, but those caps have not been established yet.

Risk of Regulatory Budgeting

The thinking on the regulatory agenda for next year is not complete, nor is how to put together the regulatory budget, Winfree said. Some of these decisions will be made by Neomi Rao—the president’s nominee for OIRA administrator—once she is confirmed, he said.

Fundamentally, Congress passes laws that direct agencies to write regulations in the most cost-effective way, Winfree said. However, there is a legal issue with getting in the way of agencies during that process, he said.

“Regulations are built from the bottom up,” Winfree said. “The authorizing statute tells the executive to go do something, and we’re essentially executing. And a regulatory budget can get in the way of our execution in a way that is important and that adds legal risk to the agencies that we have to think through.”

“And that’s why we’re taking time in thinking through exactly how we’re going to be effectuating 13,711 in the out-years, beyond 2017,” Winfree said.

Massive Reorganization Planned

“But. unlike some of the other administrations in the past, deregulation is central to this administration’s especially domestic policy efforts,” Winfree said.

It was central to the president’s budget submission sent to Congress this spring, and it will be central to the reorganization effort currently underway at the agencies, Winfree said.

The White House plans on submitting “a massive government reorganization plan” to Congress later this year or early next year, in advance of the budget, he said.

The White House is spending a lot of time thinking about how to get the agencies thinking about deregulating, setting up the mechanisms to deregulate, and then putting in place a regulatory budget, Winfree said.

To contact the reporter on this story: Cheryl Bolen in Washington at cbolen@bna.com

To contact the editor responsible for this story: Paul Hendrie at phendrie@bna.com

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