Application of the 10-for-1 Directive to Independent Federal Agencies

This past week, President Trump issued an executive order aimed at reducing Federal regulations (“Executive Order”). The Executive Order directs Federal agencies to identify at least 10 existing regulations to be repealed for every new regulation that is proposed by the agency (the “10-for-1 Directive”).

This 10-for-1 Directive is similar to an executive order issued in the first Trump administration that required the repeal of 2 existing regulations for each newly issued regulation (the “2-for-1 Directive”). In the first Trump administration, OMB determined that the 2-for-1 Directive did not apply to independent federal agencies, such as the federal banking agencies, FHFA, FTC, and CFPB.

Based upon that precedent, this 10-for-1 Directive should not apply to independent federal agencies. However, the Executive Order authorizes the Director of OMB to issue new implementing guidelines; therefore, it is to be determined if a similar exemption for independent agencies will apply to the 10-for-1 Directive.

Even if the 10-for-1 Directive were to apply to independent agencies, the Executive Order states that it does not impair or otherwise affect the authorized powers of an agency, and it cannot be applied in a manner inconsistent with law. Each of the independent federal agencies has express authority to issue regulations, and many of the regulations issued by these agencies are required by law. Moreover, to repeal an existing regulation, an agency must go through the APA notice and comment process. Thus, as a practical matter, the 10-for-1 Directive may have a limited impact on independent agencies, if applicable.

Moreover, the impact of the 10-for-1 Directive will depend on the methodology OMB applies to identifying new rules and repealed rules. In connection with the 2-for-1 Directive, OMB focused on the issuance of “significant rules” (i.e., those with an economic impact of $100 million or more) and permitted agencies to count the repeal of “other agency actions,” such as guidance documents, information collection requests, and other directives. If OMB follows a similar methodology in the application of the 10-for-1 Directive, many rules issued by the federal independent agencies may not be “significant,” and the agencies may be able to identify many “other agency actions” that could be repealed.