Administration Transition

The Trump Administration recently released its Fiscal Year (FY) 2018 budget request. The FY 2018 budget request is notable because it proposes dramatic cuts to both the Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA), among other agencies. Presidential budget proposals are at most a starting point – with Congress ultimately responsible for deciding what funds to appropriate – but often provide valuable insight into an administration’s priorities.

The FY 2018 budget request earmarks a total of $5.1 billion for FDA as a whole – an increase of $456 million or 10 percent above the funding provided by Congress in the FY 2017 Continuing Resolution. This increase, however, would consist of reducing FDA’s total budget authority by $854 million, while proposing an increase in user fees of $1.3 billion in non-food programs (which are unlikely to pass, as explained below).

The FY 2018 budget request proposes $137 billion to USDA, a decrease of $12 billion or 8 percent from an estimated $149 billion in FY 2017, and outlines plans to lower spending on USDA programs by roughly $230 billion over a decade. This memorandum discusses FDA and USDA’s plans for reducing expenditures as they relate to food safety.

As described in more detail below, the proposed FY 2018 budget calls for a sizeable reduction ($82.8 million) in FDA’s food safety program and a modest increase ($25 million) in the Food Safety and Inspection Services (FSIS) food safety program at USDA. Notably, no new user fees are proposed for either FDA or FSIS food safety budgets, although the USDA budget alludes to a desire for legislation authorizing user fees, as have past budgets.

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The White House recently announced that President Donald J. Trump plans to nominate Scott Gottlieb, M.D., to serve as FDA Commissioner. This appointment requires Senate confirmation.  Additionally, the past couple weeks have seen several actions by the Trump Administration to advance its regulatory reform agenda.

  • First, the Department of Commerce issued a request for information (RFI) to assist in its development of a plan to streamline permitting and reduce regulatory burdens for domestic manufacturing. The RFI is an opportunity for food manufacturers to voice concerns about regulations affecting the industry.
  • Second, the White House has issued a memorandum with instructions for agencies to implement Executive Order (EO) 13771 (i.e., the order establishing the “one in, two out” rule) in developing their Spring Unified Agenda submissions. It requests that agencies identify the costs of significant regulatory actions for fiscal year (FY) 2018, as well as the cost savings for the regulatory actions to be rescinded to offset those costs.
  • Third, President Trump has issued a new EO requiring the Office of Management and Budget (OMB) to develop a plan for reorganizing executive branch operations, including the potential elimination of agencies, components of agencies, or agency programs. It is not clear at this stage how the EO will affect the U.S. Food and Drug Administration (FDA) or U.S. Department of Agriculture (USDA).

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On February 24, President Donald J. Trump issued an Executive Order 13777 directing federal agencies on how to implement the administration’s recent regulatory reform initiatives. The order directs each agency to identify a Regulatory Reform Officer (RRO), who will chair a Regulatory Reform Task Force for the agency. The RROs and Task Forces will evaluate existing regulations and make recommendations regarding whether a regulation should be repealed, replaced, or modified. The order directs agencies to consider the regulation identified by the Task Forces as outdated, unnecessary, or ineffective when implementing the regulatory offsets required under Executive Order 13771, which established the requirement that the costs of each new regulation must be offset by the repeal of two existing regulations.

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The White House Office of Management and Budget (OMB) has issued interim guidance on how agencies should implement two recent White House actions—the Executive Order on Reducing Regulation and Controlling Regulatory Costs and the White House memorandum issuing a hiring freeze. The OMB guidance interpreting the Executive Order on Reducing Regulation and Controlling Regulatory Costs, which implemented the rule that for each new regulation issued, two existing regulations must be repealed to offset its costs, provides additional information on the scope of the order, how costs should be calculated, how regulations with judicial or statutory deadlines should be handled, and whether cost reductions may be shared across agencies. Importantly, the OMB guidance states that significant agency guidance documents could be included, and that such decisions will be made on a case-by-case basis.

The guidance on implementation of the hiring freeze identifies several categories of employees that are exempt from the freeze and also explains that the freeze will end as soon as OMB implements a plan to reduce the number of federal employees through attrition.

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On January 30, 2017, President Donald Trump issued an executive order to reduce the number of federal regulations and establish a process for the White House to set an annual cap on the cost of new regulations. For Fiscal Year 2017 (FY 2017), the order requires that for each new rule proposed or finalized, the agency must identify at least two existing regulations to be repealed. There also may be no net increase in costs for the regulations promulgated and repealed in 2017. For FY 2018 and subsequent years, the Director of the Office of Management and Budget (OMB) will set a cap for each agency on the total net increase in costs for new and repealed regulations, or it may require a reduction in net costs. Thus, for each new regulation an agency identifies in its Regulatory Plan that would increase costs, it must identify at least two regulations it would repeal to offset the costs.

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Since President Donald Trump was sworn in on January 20, the Trump administration has taken several actions that will affect the regulation of the food and agriculture industries domestically, as well as potential trade opportunities for these industries internationally. First, on January 20, White House Chief of Staff Reince Priebus issued a memorandum to the heads of all executive departments and agencies issuing a freeze on new or pending regulations (“Priebus Memorandum”). As described in more detail below, the effect of the freeze on regulations that have already been published in the Federal Register is limited to those that have not yet become effective (usually 60 days after publication), rather than those for which the compliance deadline has not yet been reached. The number of existing rules affected by the memorandum that would affect the food and agricultural industries, therefore, is rather limited because most of them were published in 2016 and have already become effective.

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Guest Authors-  Jonathan T. Stoel