Bergeson & Campbell, P.C.

Are executive orders effective?

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Courtesy of Bergeson & Campbell, P.C.

On Jan. 18, 2011, President Obama issued an Executive Order (EO) requiring federal agencies to review and revise existing federal regulations that are believed to hinder economic growth. To maximize the impact of the EO's issuance, the Administration took the somewhat unusual step of issuing, on the same day, an editorial penned by Mr. Obama in the Wall Street Journal. In the editorial, the President renewed his commitment to jobs and economic growth and vowed to limit regulations that impede either. So far, so good. The question remains, however, will the EO do anything?

Regulatory reform

The Obama EO reaffirms an EO President Clinton issued in 1993, namely EO 12866. The Clinton EO, Regulatory Planning and Review, was intended to make the regulatory process transparent and ensure integrity and legitimacy. A basic tenant of EO 12866 was that regulatory initiatives must be cost-effective and mindful of the regulation's impact. Federal agencies had to better coordinate regulations and provide more opportunities for public participation in the rulemaking process.

Obama's EO largely restates the requirements of EO 12866. It requires federal agencies to review existing regulations to determine which could be eliminated or revised to spur economic growth. The EO requires federal agencies to promote 'coordination, simplification, and harmonization' of regulations through better cross-department coordination. Federal agencies are to submit to the Office of Information and Regulatory Affairs (OIRA), which is part of the Office of Management and Budget (OMB), a plan within 120 days to periodically review existing regulations to determine whether they should be modified, streamlined, expanded or repealed. Agencies are required to identify rules that may be 'outmoded, ineffective, insufficient, or excessively burdensome.'

The order also encourages agencies to specify performance objectives, providing industry greater flexibility. It encourages agencies to consider alternatives to direct regulation, such as economic incentives, whenever feasible.

Will the EO do anything?

The new EO contains comforting language, but difficult to implement provisions. For example, the order states that federal agencies should review and adjust regulations that they are now enforcing. It is unclear, however, against what standard federal agencies are to revisit these requirements, many of which were required to be implemented under court order or because federal laws dictated they be implemented.

Given the current push to reduce the federal budget, agencies are being asked to undertake this review while challenged to do more with less. Soliciting the views of the regulated community in advance of a proposed rulemaking is costly and not free of consequence. If, for example, regulatory provisions are required by law or court order, some speculate that seeking public views before issuing a proposed rulemaking might invite legal consequences under the Administrative Procedure Act, as all comments must be reviewed and considered in the rulemaking record. In short, while the order sounds good, some of the provisions are challenging to implement even if the federal government had all the resources in the world, which it does not.

Stakeholders generally can get behind an EO that embraces the inherent value of rules that protect human health, welfare and safety, but do so in a way that, to quote the EO, promotes 'economic growth, innovation, competitiveness, and job creation.' The tricky part is finding a balance. Time will be the best judge of whether the EO is a meaningful addition to the President's arsenal of tools to rein in regulatory excess or rhetoric. Presently, however, the EO falls short on substance. PE

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