The President of the United States has signed a new Executive Order (EO) today which requires agencies to propose at least two prior regulations which could be eliminated for every new regulation proposed.

While the order expressly states it will not apply to military, national security or foreign affairs, it does not expressly exempt the FAA or the USDOT.

I have reached out to the FAA for comment on whether this new EO affects their regulations, and to comment on the implications if it does. The FAA has replied: “You have to call the White House.”

Perhaps colleagues would like to take this further. To assist in review, I am presenting the full text of the executive order with annotations [bold italics in brackets] about the potential implications to aviation, if it the EO were to apply to these two agencies.

It is important to note that—while the purpose of the EO is to protect U.S. businesses from regulations considered costly and burdensome—aviation is an international industry and many foreign carriers are affected by U.S. regulations when they fly to the U.S..

Furthermore, regulatory authorities around the world use FAA regulations as the base-line for their own regulations. Last, when aviation accidents occur overseas, involving U.S Carriers or aircraft built in the U.S., FAA regulations are also relevant to the investigation of the accident by the NTSB. Further NTSB findings on accidents and incidents may result in a need for immediate new regulations.

NB: I am not qualified to interpret the ultimate implications of this EO, and don’t pretend to be. I am only annotating the EO based on what I know of present aviation regulatory requirements, for the purpose of review by airline industry experts. It will be up to those more qualified, and to the White House, to ultimately answer these points.

Feel free to post your own comments and observations below.

“REDUCING REGULATION AND CONTROLLING REGULATORY COSTS

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the Budget and Accounting Act of 1921, as amended (31 U.S.C. 1101 et seq.), section 1105 of title 31, United States Code, and section 301 of title 3, United States Code, it is hereby ordered as follows:

Section 1. Purpose. It is the policy of the executive branch to be prudent and financially responsible in the expenditure of funds, from both public and private sources. In addition to the management of the direct expenditure of taxpayer dollars through the budgeting process, it is essential to manage the costs associated with the governmental imposition of private expenditures required to comply with Federal regulations. Toward that end, it is important 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. [The mention of the budgeting process is of concern here for three reasons: 1) the FAA or the USDOT might find it necessary to draft new regulations at any point in the year in response to an accident or other airline safety incident. 2) It is not clear whether this language could hold require these agencies to account for the costs to their own budgets of implementing new regulations and oversight of compliance. 3) If #2 does require the agency to account for these costs of implementing and oversight, it is not clear whether other agency activities would need to be sacrificed to free up funds for those new activities.]

Sec. 2. Regulatory Cap for Fiscal Year 2017. (a) Unless prohibited by law, whenever an executive department or agency (agency) publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed. [The FAA publishes new revisions to regulations on a regular basis, sometimes day-to-day. Sometimes these include adjustments to regulations which are deemed inadequate to purpose, or no longer relevant to industry. However, having to find two additional regulations to propose for each one published for public review might result in a burden to regulators both in budget and time. As a result, even regulatory proposals which might save the airline industry money could be delayed while the agencies find these two or more alternatives. Furthermore, reaching consensus with industry on the two (or more) existing regulations to eliminate could lead to a protected and confusing period for comments.]

(b) For fiscal year 2017, which is in progress, the heads of all agencies are directed that the total incremental cost of all new regulations, including repealed regulations, to be finalized this year shall be no greater than zero, unless otherwise required by law or consistent with advice provided in writing by the Director of the Office of Management and Budget (Director). [This might be difficult for the agencies to achieve and could have serious safety implications. For example, if an aviation safety incident requires airlines to ground planes, do the costs of grounded planes count towards the total costs of enforcement? If it were to require a change out burning aircraft batteries, for example, will the costs to re-engineer aircraft also count towards this zero total incremental cost budget? How can the agencies ensure this prior to calling for these changes?]  

(c) In furtherance of the requirement of subsection (a) of this section, 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. Any agency eliminating existing costs associated with prior regulations under this subsection shall do so in accordance with the Administrative Procedure Act and other applicable law. [The addition of “the extent permitted by law” is confusing. It might imply the agencies (or consumer groups) affected will need to legally challenge the restrictions of this EO each time its limitations prevent the agencies (or consumer groups) from acting in the interest of aviation safety and the flying public.]  

(d) The Director shall provide the heads of agencies with guidance on the implementation of this section. Such guidance shall address, among other things, processes for standardizing the measurement and estimation of regulatory costs; standards for determining what qualifies as new and offsetting regulations; standards for determining the costs of existing regulations that are considered for elimination; processes for accounting for costs in different fiscal years; methods to oversee the issuance of rules with costs offset by savings at different times or different agencies; and emergencies and other circumstances that might justify individual waivers of the requirements of this section. The Director shall consider phasing in and updating these requirements. [This oversight might further delay regulations and prove burdensome to the Director simply because of the technical complexities surrounding aviation safety regulations.]

Sec. 3. Annual Regulatory Cost Submissions to the Office of Management and Budget. (a) Beginning with the Regulatory Plans (required under Executive Order 12866 of September 30, 1993, as amended, or any successor order) for fiscal year 2018, and for each fiscal year thereafter, the head of each agency shall identify, for each regulation that increases incremental cost, the offsetting regulations described in section 2© of this order, and provide the agency’s best approximation of the total costs or savings associated with each new regulation or repealed regulation. [This accounting might get very complicated with the varied cost impact to airlines with different operating models, flying mixed fleets, with a mixed sets of cabin components.] 

(b) Each regulation approved by the Director during the Presidential budget process shall be included in the Unified Regulatory Agenda required under Executive Order 12866, as amended, or any successor order.

(c)  Unless otherwise required by law, no regulation shall be issued by an agency if it was not included on the most recent version or update of the published Unified Regulatory Agenda as required under Executive Order 12866, as amended, or any successor order, unless the issuance of such regulation was approved in advance in writing by the Director.

(d) During the Presidential budget process, the Director shall identify to agencies a total amount of incremental costs that will be allowed for each agency in issuing new regulations and repealing regulations for the next fiscal year. No regulations exceeding the agency’s total incremental cost allowance will be permitted in that fiscal year, unless required by law or approved in writing by the Director. The total incremental cost allowance may allow an increase or require a reduction in total regulatory cost. [Again, how can this be applied if an incident occurs mid-year? How will the costs-allowance be calculated for urgent matters of aviation safety?]

(e) The Director shall provide the heads of agencies with guidance on the implementation of the requirements in this section.

Sec. 4. Definition. For purposes of this order the term “regulation” or “rule” means an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency, but does not include:

(a) regulations issued with respect to a military, national security, or foreign affairs function of the United States; [This does not expressly exclude agencies governing aviation, FAA and DOT. The mention of regulations and rules above adds complications because there are many “rules” of practice and separate enforceable “regulations” which govern the certification and upkeep of components and aircraft.]

(b) regulations related to agency organization, management, or personnel; or

(c) any other category of regulations exempted by the Director.

Sec. 5. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c)  This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.” [If foreign entities won’t benefit from these regulatory changes what does this mean for foreign carriers and for aircraft manufactured abroad? Could, for example, foreign airlines which operate flights to the U.S. and thus have to comply with FAA/USDOT regulations, now be held to separate regulatory standards, giving U.S. airlines a financial advantage in their market and beyond? Might there be one set of regulations for Boeing aircraft and another set for Airbus aircraft? How will this EO affect efforts over the past two decades to reconcile EASA and other regulations with FAA standards? ]  

For additional insights on the impact of this new EO, I recommend this article on Bloomberg:

Trump’s Bid to Slash Regulations Faces Bureaucratic Roadblocks

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