OMB Provides More Guidance on Implementing Regulations-Cutting Executive Order

The Office of Information and Regulatory Affairs (OIRA) at the Office of Management and Budget (OMB) issued a Memorandum (M-17-21) on April 5 that provides additional guidance for implementing Executive Order (EO) 13771. President Donald Trump issued EO 13771 on January 30 requiring federal agencies to repeal two existing regulations if a new regulation is proposed (see Memo, 2/6). In addition, agencies must calculate the incremental cost of all new and repealed regulations so that there is no additional net cost due to regulatory action during a given year.

OIRA issued interim guidance on the EO on February 2 and NLIHC submitted comments regarding that guidance (see Memo, 2/13). The newest guidance is in the form of 39 questions and answers, many of which are likely to be intelligible only to federal agency legal staff responsible for regulatory affairs.

The guidance still does not clarify the definition of “regulation.” For example, it is not clear whether elimination of a regulation pertains to an entire regulation, such as the Community Development Block Grant regulation for entitlement jurisdictions (24 CFR part 570, subpart D) or a section or sections of the CDBG entitlement regulation, such as the requirement that records be maintained showing how low and moderate income people are benefitting (Section 570.506) and the requirement to have a displacement plan (Section 570.606). Without further clarification, the Memorandum suggests the intention is to eliminate entire regulations rather than portions of regulations because M-17-2 states that EO 12866 from 1993 remains the governing EO. Executive Order 12866 defines a regulation as “an agency statement of general applicability and future effect, which the agency intends to have the force and effect of law, that is designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency.”

Questions 10 and 11 address interim regulations. The national Housing Trust Fund (HTF) and the Section 3 hiring and contracting obligations both currently operate under interim regulations. The answer to question 10 declares that interim rules must be “offset.” Therefore, when final versions of the HTF or Section 3 interim rules are proposed, HUD will have to offset their costs by eliminating other regulations and bringing the net cost of the final HTF or Section 3 rule to zero. However, the answer to question 11 states that if a final rule neither increases nor decreases the cost of the interim rule, then there is no need to identify an offset. Also, if a final rule has only minimal costs compared to the interim rule, the final rule may qualify for an exemption.

Question 26 addresses a regulatory action that finalizes an interim rule. The Memorandum indicates that agencies typically present two sets of estimates: the overall regulatory impacts and the incremental impacts relative to the interim rule. For EO 13771 purposes, agencies finalizing an interim rule should include only the incremental impacts of the final rule relative to the interim rule.

Question 21 asks how cost savings should be measured. The Memorandum points to OMB Circular A-4 and notes that there are several types of impacts that could be categorized as either benefits or costs. For example, if medical cost savings due to safety regulations have been historically categorized as benefits rather than reduced costs, they should continue to be categorized as benefits for EO 13771 actions. Therefore, when identifying cost savings for EO 13771 deregulatory calculations, those medical cost savings would not count as cost savings because they were historically considered benefits.

Memorandum M-17-21 is at: