Bud's Offshore Energy (BOE)

The “Zero Based Regulatory Budgeting” Executive Order will promote confusion and uncertainty, not sustainable regulatory reform.

The EO requires agencies to issue a rule, effective not later than September 30, 2025, that inserts a sunset date into each “covered regulation.” The sunset date must be 1 year after the effective date of the sunset rule, but may be extended multiple times for a total of up to 5 years.  

From an offshore energy perspective, the confusion starts with the EO’s applicability. One section of the order exempts regulatory permitting regimes authorized by statute. Another section specifies that the order “applies to all regulations issued pursuant to the Outer Continental Shelf Act of 1953 and any amendments thereto.” This is a fundamental contradiction given that OCSLA is a statutory planning and permitting regime. Which regulations are subject to the EO?

Comments:

• For some reason (too complicated?), EPA and the Army Corps of Engineers are given 30 days to provide a list of statutes that are subject to the EO. Perhaps all affected regulators should have been given 30 days to comment on the draft EO before it was finalized.
• The EO is sure to create chaos as regulators, under the direction of managers keen on complying with the President’s directive, attempt to determine the EO’s applicability and establish implementation procedures.
• The EO, which is intended to provide order and certainty, will do exactly the opposite. How does the regulated industry plan for future operations while this vague and controversial “zero based regulatory budgeting” exercise is ongoing? What are the chances of this directive being sustained?
• Reducing the number of pages in the US Code, while desirable, is not regulatory reform.
• The order assumes that most regulations are meaningless, which is not the case. What is the plan for filling the void after regulations are deleted?
• The EO should embrace, rather than circumvent, the notice and comment requirements of the Administrative Procedures Act. The tedious and sometimes burdensome APA has protected the public and the energy industry from countless unjustified, unauthorized, and poorly considered regulatory initiatives.
• Eliminating rules is not synonymous with establishing a regulatory framework that will improve efficiency and stimulate innovation.
• Other factors are paramount in improving regulatory effectiveness and efficiency. These include regulatory fragmentation, effective goal setting, management systems, culture, data gathering, performance monitoring, continuous improvement, collaboration, and the adoption of industry standards.
• Quality regulators are more important than quality regulations. Regulating with fewer rules requires skilled regulators.
• Agencies should be directed to consider how they can best reduce the regulatory burden without compromising safety and environmental performance. Page reduction should be secondary.

If regulatory efficiency is the goal, this EO is likely to do more harm than good. Federal agencies are largely comprised of bright people with good intentions. Challenge them to propose innovative reforms that will simplify and improve their regulatory regimes.

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