Seeking to “unleash prosperity through deregulation” and fulfilling a campaign promise, President Trump has signed an executive order to implement a requirement that for every new regulation, ten existing regulations must be eliminated.  The regulation puts the Director of the Office of Management and Budget (the “Director”), in charge of implementing the order. 

The order is similar to Executive Order 13771 from President Trump’s first term in 2017, which had a two-to-one regulatory elimination requirement.  President Trump’s first administration exceeded this requirement and eliminated five and a half regulations for each new regulation.

The executive order provides that “whenever an executive department or agency publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least 10 existing regulations to be repealed.”

The following requirements of the executive order are immediately applicable to the 2025 current fiscal year.  According to the order:

• The total incremental cost of all new regulations, including repealed regulations, to be significantly less than zero.  This is increased from the previous requirement from 2017, which required the net costs to be zero.
• Any 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 ten 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 2026, 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 incremental cost 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above, and provide the agency’s best approximation of the total costs or savings associated with each new regulation or repealed regulation.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.

As used in the executive order, the term “regulation” or “rule” is broadened from the 2017 definition and 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, including, without limitation, regulations, rules, memoranda, administrative orders, guidance documents, policy statements, and interagency agreements, regardless of whether the same were enacted through the processes in the Administrative Procedure Act.”  The definition includes 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.

Following Executive Order 13771 in 2017, the Order was challenged in court by both private parties and several states, though all challenges were ultimately dismissed.  Additionally, in 2017, the OMB clarified that the Executive Order did not apply to independent agencies like the SEC.  It remains to be seen what challenges or clarifications will follow this Executive Order.