Overview. On January 30, 2017, the President issued an Executive Order on Reducing Regulation and Controlling Regulatory Costs (“EO” or “Executive Order”) requiring Agencies to eliminate two existing regulations for each new regulation that is proposed. This EO is commonly referred to as the “One In, Two Out” Executive Order. On February 3, 2017, the White House issued Interim Guidance (the “Guidance”) implementing Section 2 of the Executive Order.
Details. Section 2(a) of the Executive Order provides:
(a) Unless prohibited by law, 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notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed.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 Interim Guidance issued clarifies that this Section of the Executive Order applies only to "significant" regulations. "Significant" is not defined in the guidance, but under a 1993 Executive Order still in effect, a "significant" rule is defined as any rule that that imposes an annual economic cost of $100 million or more.
According to the Interim Guidance, agencies that plan to issue a “significant regulatory action” on or before Sep. 30, 2017, must first “identify two existing regulatory actions the agency plans to eliminate or propose for elimination” before the new regulation is issued. The agency must also “fully offset total incremental cost” of the new regulation “as of September 30, 2017.”
The Guidance says that regulations issued before January 20, 2017, that are “vacated or remanded by a court” generally do not count as regulations that may be repealed in exchange for a new one. However, regulations that are overturned by Congress under the Congressional Review Act may “generally” count.
The costs of regulations are “measured as the opportunity cost to society,” defined as "the net benefit [a] resource would have provided in the absence of the requirement." Agencies may not use previously calculated costs from Regulatory Impact Analyses for cost estimates, and must instead use “the most current information available.”
The Guidance allows for a waiver from the EO’s requirements for regulations that address health, safety or financial emergencies.
Employer Impact. It is expected that implementation of this Executive Order will naturally result in less employer regulation. The extent of the restriction is yet to be determined.
As always, please contact your Relationship Manager, or Service Team, with any questions.