January 20, 2017 Memorandum from Reince Priebus
On January 20, 2017, the White House issued a memorandum for the Heads of Executive Departments and Agencies. In the memorandum, Reince Priebus, Assistant to the President and Chief of Staff, provided a directive including the following:
- Do not send any regulations to the Office of the Federal Register (OFR) until a department or agency head or designee appointed by President Trump has reviewed and approved the regulation;
- Immediately withdraw any regulations that have been sent to the OFR but have not been published; and
- Temporarily postpone by 60 days implementation of any regulations published in Federal Register but that have not taken effect.
“Regulations” for purposes of the memorandum include guidance documents and any other statements “that set forth a policy on a statutory, regulatory, or technical issue or an interpretation of a statutory or regulatory issue.”
The memorandum does not apply to (i) emergency situations or other urgent circumstances relating to health, safety, financial, or national security matters; or (ii) any publications subject to statutory or judicial deadlines that must be identified to the Office of Management and Budget (OMB) Director.
While Tom Price has been confirmed as the Secretary of HHS and Rick Mulvaney has been confirmed as the OMB director, confirmations and a nomination are still pending for the Secretary of the U.S. Department of Agriculture (USDA) and the Commissioner of the Food and Drug Administration (FDA):
- USDA Secretary: Mike Young is serving as USDA Deputy Secretary, while Sonny Perdue is awaiting his confirmation hearings that have not yet been scheduled.
- FDA Commissioner: Stephen Ostroff, M.D. is serving as Acting Commissioner of FDA, while a new commissioner has not yet been nominated by the Trump administration.
Although no new regulations may be sent to the OMB Director for review until new USDA and FDA heads are appointed by President Trump, neither the Food Safety Modernization Act (FSMA) regulations, nor the Nutrition Fact Label final rule that went into effect on July 26, 2016, appear to be implicated by the memorandum.
Examples of regulations likely halted include:
- Health Care
- CMS Proposed Rule, Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2018 (sent to OMB for White House review on February 2, 2017). On February 15, 2017, CMS issued a proposed rule “Patient Protection and Affordable Care Act; Market Stabilization” under Tom Price’s leadership.
- FDA Draft Guidance for the Industry, Control of Listeria Moncytogenes in Ready-to-Eat Foods (published in the Federal Register on January 17, 2017);
- USDA Final Rule, National Organic Program (NOP); Organic Livestock and Poultry Practices (published in the Federal Register on January 19, 2017; effective date March 20, 2017) .
- HHS, Health Resources and Services Administration, Omnibus Guidance (withdrawn by OMB and sent back to HHS on January 20, 2017).
- FDA Proposed Rule, Tobacco Product Standard for N-Nitrosonornicoton Level in Finished Smokeless Tobacco Products (published in the Federal Register on January 23, 2017);
- FDA Final Rule, Clarification of When Products Made or Derived From Tobacco are Regulated as Drugs, Devices, or Combination Products; Amendments to Regulations Regarding ‘Intended Uses’ (effective date delayed from February 8, 2017 to March 21, 2017).
- HHS Final Rule, Confidentiality of Substance Abuse Disorder Patient Records (published in the Federal Register on January 18, 2017; effective date February 17, 2017).
President’s Executive Order & OMB’s Interim Guidance for Agencies
Furthermore, on January 30, 2017, President Trump signed the “Reducing Regulation and Controlling Regulatory Costs” executive order (EO).
In the EO, the President directed that “for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.” Moreover, “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 two prior regulations.”
This EO is in effect from noon on January 20, 2017 until September 30, 2017. It also covers significant final regulations for which agencies issued a Notice of Proposed Rulemaking before noon on January 20.
On February 2, 2017, the OMB Information and Regulatory Affairs (OIRA) issued an interim guidance for agencies, regarding implementation of the EO. This guidance clarifies that the order applies only to significant rules and only to agencies required to submit major rules for review to OIRA. Further, it provides that “Federal spending rules that primarily cause income transfers from taxpayers to program beneficiaries (e.g., rules associated with Pell grants and Medicare spending) are considered ‘transfer rules’ and are not covered by this EO.”
Lawsuit to Overturn EO and OMB’s Guidance
On February 8, 2017, a lawsuit (1:17-cv-00253) was filed by a public interest, environmental and labor groups seeking declaratory and injunctive relief from the January 30, 2017 EO and OMB’s February 2, 2017 guidance.
Specifically, the suit was filed by Public Citizen, Inc., Natural Resources Defense Council, Inc. and Communications Workers of America, AFL-CIO against Donald J. Trump, et al. in the U.S. District Court for the District of Columbia.
Plaintiffs claim that the EO “exceeds President Trump’s constitutional authority, violates his duty under the Take Care Clause of the Constitution, and directs federal agencies to engage in unlawful actions that will harm countless Americans, including plaintiff’s members.”
The Take Care Clause of the Constitution refers to the clause that imposes a duty on the President to take due care while executing laws.
In sum, the plaintiffs allege that a blunt directive to scrap two regulations for every new one is arbitrary, capricious and potentially harmful to the public and environment – for example, if the regulations pertain to automobile safety, occupational health, air pollution or endangered species.
Additionally, the net zero regulatory budget established in the rule, indicates that agencies have to offset any new standards by repealing older ones. The plaintiffs argue that this approach is irrational and “divorced from any consideration of the benefits of these protections” (emphasis in original).
Even if the District Court were to reject this lawsuit because it is not yet ripe for review given that agencies have not yet taken action in response to the order, experts expect other lawsuits on the same grounds.
In the meantime, it is not clear which “two prior regulations would be identified for elimination” to implement CMS’s new proposed rule to shore up the insurance marketplaces.