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Fulfilling a campaign promise set forth in President Trump’s Contract with the American Voter, President Trump has signed an executive order to implement a requirement that for every new federal regulation, two existing regulations must be eliminated. The regulation puts the Director of the Office of Management and Budget, or the Director, in charge of implementing the executive order.  Reuters reported that the White House confirmed the executive order does not apply to independent regulatory agencies such as the Securities and Exchange Commission.

The executive order provides that “Whenever an executive department or agency (agency) publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed.”

The following requirements of the executive order are immediately applicable to the 2017 current fiscal year.  According to the order:

  • The total incremental cost of all new regulations, including repealed regulations, to be finalized this year shall be no greater than zero.
  • Any new incremental costs, or New Incremental Costs, associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.
  • The Director shall provide the heads of agencies with guidance on the implementation of these provisions.

The executive order also provides parameters for regulations proposed in fiscal year 2018, and each subsequent fiscal year thereafter. According to the order:

  • The head of each agency shall identify, for each regulation that increases incremental cost, the regulations which offset New Incremental Costs described above, and provide the agency’s best approximation of the total costs or savings associated with each new regulation or repealed regulation.
  • Each regulation approved by the Director during the Presidential budget process shall be included in the Unified Regulatory Agenda required under Executive Order 12866, as amended, or any successor order.
  • During the Presidential budget process, the Director shall identify to agencies a total amount of incremental costs that will be allowed for each agency in issuing new regulations and repealing regulations for the next fiscal year. No regulations exceeding the agency’s total incremental cost allowance will be permitted in that fiscal year, unless required by law or approved in writing by the Director. The total incremental cost allowance may allow an increase or require a reduction in total regulatory cost.
  • The Director shall provide the heads of agencies with guidance on the implementation of the requirements in these provisions on standardized measurement and estimation of regulatory costs.
  • The Director will also be tasked with determining whether emergencies and/or other circumstances might justify individual waivers of the order’s requirements.

As used in the executive order, the term “regulation” or “rule” means an agency statement 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. There are exceptions for military, national security, or foreign affairs functions, regulations related to agency organization, management, or personnel, and any other category of regulations exempted by the Director.

The executive order is in addition to a regulatory freeze ordered by Reince Priebus, President Trump’s Chief of Staff. How the two directives work together remains to be seen.