Only 'Significant' Regulations Require Repeals Under 'Two-for-One" Executive Order, OMB Says

A recent executive order requiring the repeal of two regulations for every new one implemented applies only to regulations deemed “significant” by the Office of Management and Budget, according to “interim guidance” issued by OMB on Feb. 2 (here). The interim guidance also lists exemptions to the “two-for-one” and regulatory budgeting requirements set by the executive order, as well as what qualifies as a deregulatory action, including elimination of reporting and recordkeeping requirements. Despite the potential burden, the interim guidance said agencies must perform new cost analyses for the two deregulations, rather than relying on previous cost estimates.

Application of deregulatory requirements only to significant new regulations means several upcoming CBP final rules are apparently exempt. For example, the Fall 2016 Unified Agenda (here) lists final rules on the Centers of Excellence and Expertise, due process procedures suspending or revoking entry filer code and other privileges, and changes to the in-bond process as non-significant regulations. On the other hand, final regulations on antidumping and countervailing duty evasion investigations under the Enforce and Protect Act and Section 321 low value entries are significant, and would presumably require deregulation unless they qualify for an exemption. OMB’s Office of Information and Regulatory Affairs determines whether or not regulations are significant.

Exemptions to deregulatory requirements include new regulations “addressing critical health, safety, or financial matters, or for some other compelling reason,” as determined by OMB, the interim guidance said. Regulations required by law are not subject to deregulatory requirements, nor are “regulations that affect only other Federal agencies (and not the public); that are issued with respect to a military, national security, or foreign affairs function of the United States; and that are related to agency organization, management, or personnel,” the interim guidance said. Deregulatory actions issued by an agency generally don’t count as “regulations” that require further deregulation, though if they impose costs agencies will be required to offset them, it said. “New significant guidance or interpretive documents will be addressed on a case-by-case basis,” OMB said.

Any savings-producing repeal or revision of any existing regulation that imposes costs may qualify as one of the two deregulatory actions in the two-for-one rule, OMB said. “Meaningful burden reduction through the repeal or streamlining of mandatory reporting, recordkeeping or disclosure requirements may also qualify,” it said. In some circumstances, agencies may set new regulations and perform the required deregulatory action in the same “regulatory program,” the interim guidance said. “In this case, the agency must clearly identify the specific provisions that are counted within the regulatory and deregulatory portion of the rules, and the costs and cost savings associated with each,” it said.

Agencies should identify all deregulatory actions, “along with cost saving estimates, no later than the date of issuance of the corresponding new significant regulatory action,” the interim guidance said. Most of the time the deregulatory actions will be identified in the “preamble” text of the rule, with the deregulatory actions occurring “to the extent feasible” on the same timetable as issuance of the new regulation, it said. Agencies must develop new cost estimates when they assess the savings from a deregulatory action, and cannot rely on cost estimates from the original regulatory impact analysis when the regulation subject to repeal was first issued, OMB said.