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OMB Issues Interim Guidance for Reducing Regulatory Costs

On February 2nd, the Office of Management and Budget (OMB) released interim guidance for implementation of Section 2 of the January 30th Executive Order (EO) titled “Reducing Regulation and Controlling Costs”. Section 2 of this EO mandates that two regulations be repealed for every new regulation and that the total incremental cost of all new regulations, including the repealed regulations, to be finalized in fiscal year (FY) 2017 should be no greater than zero.
This guidance is a series of questions and answers that provides some insights into how this new EO will fit into the SDWA regulatory development process, but there are still some unanswered questions. With the Long-Term Revisions to the Lead and Copper Rule (LCR) scheduled to be proposed sometime in 2017, one question was whether this EO applies to final regulations or includes proposed regulations. This guidance is clear that “the most appropriate place for such an identification [of deregulatory actions] is in the preamble of the rule being issued for notice of comment or promulgated”.
EPA will be challenged to identify deregulatory actions that would offset the costs of the Long-Term Revisions to the Lead and Copper Rule (LCR) for two reasons. First, the obvious targets for deregulation are regulated chemicals not being found in drinking water but deregulating a contaminant with zero occurrence would not generate any cost savings to the water systems. Second, the 1991 LCR was the most expensive regulation promulgated by EPA (approximately $1.4 billion per year in 2013 dollars) so it’s not likely that the Long-Term Revisions would be under the $100 million per year threshold for applicability of this new EO. However, LCR revisions might qualify for a waiver as addressing a critical health emergency but it’s too early to tell how easy these waivers will be to obtain. It will be interesting to see how EPA addresses these challenges when the Long-Term Revisions are proposed later in 2017.