Tag Archives: Executive Order

What’s Really in Those New Executive Orders?

Late on Friday afternoon, the White House announced that President Donald Trump had signed 3 Executive Orders that will affect the civil service. They are:

Executive Order Promoting Accountability and Streamlining Removal Procedures Consistent with Merit System Principles

Executive Order Ensuring Transparency, Accountability, and Efficiency in Taxpayer Funded Union Time Use

Executive Order Developing Efficient, Effective, and Cost-Reducing Approaches to Federal Sector Collective Bargaining

OPM Director Jeff Pon issued a statement saying “These Executive Orders are about protecting taxpayers’ dollars, including those of our dedicated federal employees, and putting those resources to use in the most efficient and effective way possible. By holding poor performers accountable, reforming the use of taxpayer-funded union time, and focusing negotiations on issues that matter, we are advancing our efforts to elevate the federal workforce. The vast majority of our employees are dedicated public servants who are dedicated to their missions and service to the American people. It is essential that we honor their commitment, and these measures reflect just that. Looking ahead, our focus will be on continuing to leverage technology to digitize our federal human resources infrastructure, build modern public human resources systems for the 21st century, and celebrate the hardworking federal employees who serve our great Nation each and every day.’

The new Executive Orders got a quick reaction from others, with American Federation of Government Employees President J. David Cox saying “Our government is built on a system of checks and balances to prevent any one person from having too much influence. President Donald Trump’s Executive Orders will undo all of that. This administration seems hellbent on replacing a civil service that works for all taxpayers with a political service that serves at its whim.”

Virginia Congressman Gerry Connolly tweeted “Trump continues his assault on the federal workforce with today’s executive orders. Attacking unions and demagoguing federal workers won’t help morale. Show the federal workforce that serves all Americans the respect it deserves, Mr. President.”

Heritage Foundation President (and former OPM Director) Kay Coles James tweeted “Encouraged to see POTUS executive orders for our civil service. These are important reforms and will make our government work more efficiently for taxpayers!”

So what are these Executive Orders? The death of democracy? The salvation of our nation? Those extremes overstate the impact these orders will have, both good and bad. With that in mind, this is the first of 2 posts I will write to go through the provisions of the orders. This post will focus on the order streamlining removal procedures, while the next will cover the 2 orders that address union issues. I will highlight key provisions of each order, along with my take on what it means and how it might affect federal workers. Let’s start with the order titled “Executive Order Promoting Accountability and Streamlining Removal Procedures Consistent with Merit System Principles.”

Section 1 — Purpose.

This section outlines the requirements in the Merit System Principles that employees be held accountable for performance and conduct (Merit System Principles 4, 5 and 6). It goes on to say that employees, via the Federal Employee Viewpoint Survey, have said their agencies do not do enough to deal with poor performers. Those are both facts, so I do not have anything to add, other than that I agree with the employees.

Section 2 — Principles for Accountability in the Federal Workforce. 

This section requires that “removing unacceptable performers should be a straightforward process that minimizes the burden on supervisors” and “agencies should limit opportunity periods to demonstrate acceptable performance under section 4302(c) (6) of title 5, United States Code, to the amount of time that provides sufficient opportunity to demonstrate acceptable performance.” It goes on to say “Supervisors and deciding officials should not be required to use progressive discipline. The penalty for an instance of misconduct should be tailored to the facts and circumstances.” After a brief discussion of the reason why discipline should be tailored to each employee’s circumstances, the order states “Suspension should not be a substitute for removal in circumstances in which removal would be appropriate. Agencies should not require suspension of an employee before proposing to remove that employee, except as may be appropriate under applicable facts.” It goes on to say that agencies should make decisions on proposed removals within 15 days of the end of the employee reply period, and that agencies should use Chapter 75 (adverse action) procedures where appropriate rather than the more common Chapter 43 (performance) procedures when dealing with poor performance. It also reminds agencies that the probationary period is the final step in the hiring process. A final paragraph says agencies should “prioritize performance over length of service when determining which employees will be retained following a reduction in force.”

There is a lot in this section. The statement about progressive discipline does not actually change anything. There is no requirement to use progressive discipline when it is not appropriate. For example, if an employee physically assaults another employee, and agency could go directly to a removal. There are other offenses for which removal on the first offense is appropriate. Most agency tables of penalties have numerous offenses where the prescribed penalty for a first offense is “reprimand to removal.” The part about probationary periods is right on target. Many agencies do a poor job of using the probationary period to weed out employees with conduct or performance problems and probation is, in fact, considered to be the final step in the hiring process. If agencies made better use of probation, many problem employees would go away long before they could become problems.

One of the most interesting provisions in this section is the requirement that OPM rewrite the regulations for reduction in force to “prioritize performance over length of service.” My first thought was that they could not do that because the law requires the current hierarchy of tenure group (career or career-conditional), then veteran preference, then length of service, and finally, performance, in determining RIF retention standing. The RIF provisions in the United States Code do not appear to specify that those factors be considered in that order. They are listed in that order and OPM regulations prioritize them in that order. It appears the administration does have the authority to rewrite the regulations to place performance higher in the list of considerations. Putting performance first has already been done in the Department of Defense, based on provisions in the 2016 National Defense Authorization Act.

Section 3 — Standard for Negotiating Grievance Procedures.

This section requires that “Whenever reasonable in view of the particular circumstances, agency heads shall endeavor to exclude from the application of any grievance procedures negotiated under section 7121 of title 5, United States Code, any dispute concerning decisions to remove any employee from Federal service for misconduct or unacceptable performance.” The idea here is that removals would not go through a negotiated grievance procedure (and arbitration), but rather would go to the Merit Systems Protection Board. This one is much easier said than done. Negotiated grievance procedures are exactly that — negotiated. Unions may not want to agree to such provisions and agencies will not be able to impose them unilaterally. What the president ordered is within his rights as chief executive, but refusing to go along is within the rights of unions. Getting anywhere on this one is going to take a long time.

The bigger question is whether it will actually make a big difference, even if fully implemented. In reality, unions often encourage employees to appeal to MSPB rather than going through the grievance/arbitration process. That is because typically because the union and agency split the cost of arbitration. What we may find is that this provision of the executive order may have little real impact.

Section 4 — Managing the federal workforce.

This section lays out a number of things agencies cannot do, including subjecting ratings and awards to a grievance or arbitration process, agreeing to limits on the agency’s ability to use Chapter 75 rather than Chapter 43 procedures, and giving employees more than 30 days notice before a removal. Like the changes in Section 3, most of this is negotiable. That means nothing will change quickly in response to the executive order.

Section 5 — Ensuring integrity of personnel files.

This section says “Agencies shall not agree to erase, remove, alter, or withhold from another agency any information about a civilian employee’s performance or conduct in that employee’s official personnel records, including an employee’s Official Personnel Folder and Employee Performance File, as part of, or as a condition to, resolving a formal or informal complaint by the employee or settling an administrative challenge to an adverse personnel action.”

There are 2 sides of this issue. The first is the idea that agencies should not agree to let a problem employee walk out with a clean record and go to work in another agency. The second is the idea that settlement agreements can save a lot of time and money and get a problem employee out of the agency for good with no risk of being overturned by a third party. Both arguments have merit. In an ideal world, settlement agreements would include language that an employee would not seek federal employment again, but agencies tend to think about the problem in front of them rather than the problem they might be creating for another agency a year from now. The president has the authority to issue this direction to agencies, but may find that getting them to abide by it is more difficult.

Sections 6, 7 and 8 — Implementation guidance.

These sections state that the executive order will need implementing guidance and regulations and that the order does not abrogate collective bargaining agreements.

What does really do and what does it miss?

This order is unlikely to result in immediate changes that will affect most federal employees. Agencies do not fire large numbers of people and are unlikely to start doing so now. We may see fewer settlement agreements and agencies taking a harder line on contract negotiations. Employees with performance problems may find they have less time to improve, or, if the agency elects to use Chapter 75 procedures, no time to improve before receiving a notice of proposed removal.

There are a few things that this order could have included that might have made a more immediate difference. For example, rather than getting into a discussion of the merits of progressive discipline (which often works in the agencies’ favor), agencies could have been ordered to update their tables of penalties to make removal the preferred penalty on the first offense for some particularly egregious offenses. For example, if an employee physically assaults another employee, uses certain illegal drugs, or commits other severe offenses, the agency would consider those as mandatory removal offenses in the absence of some compelling individual circumstances. Some agencies have no table of penalties, making it harder for managers to decide what is a proper penalty. Requiring every agency to develop a table of penalties would be another good step.

Another more consequential change would be to focus on the time between the offense and the proposed discipline. The executive order focuses on the time between the proposed notice and the decision, when the reality is that much of the time is often in the gap between an employee doing something and the agency issuing a proposal letter. It may be months after an offense before the agency gets around to doing something about it. The time lag makes discipline less effective because it is so long after the offense occurred. That time is not typically governed by law, regulations or collective bargaining agreements. Significantly reducing the gap would have the dual benefits of reducing the time to take an action and making actions such as reprimands and suspensions more effective by reinforcing the cause-and effect nature of misconduct and discipline.

The bottom line is that this Executive Order may make a small dent in the problem of dealing with poor performers and misconduct. It may result in changes to collective bargaining agreements at some point in the future. For the vast majority of federal workers who do their jobs and do not have performance or conduct problems, there is likely to be no impact at all. With respect to this Executive Order — in the words of the British Ministry of Information during World War II, Remain Calm and Carry On.

Tagged , , , , , , , , ,

Deregulation – It’s Harder Than it Looks

Last month I wrote a post that explained why cutting the federal workforce is much harder than it might appear. That post prompted a discussion with one of my ICF colleagues (Gary Light) regarding President Trump’s Executive Order on deregulation. It should not come as a surprise that deregulation, much like cutting the workforce, is easy in theory and difficult in execution. I asked Gary to write a guest blog post so ChiefHRO readers can take a look into the complex world of federal regulations.  

President Trump’s January 30, 2017 Executive Order, “Reducing Regulation and Controlling Regulatory Costs,” is intended to reduce the number of federal regulations by requiring agencies to identify two regulations to be repealed for each “new” regulation (the “2 for 1” rule) and offset costs from “new” regulations with cost savings (the “net zero” rule).  On February 2, 2017, the Acting Administrator for OMB’s Office of Information and Regulatory Affairs (OIRA) published additional guidance for implementing the Executive Order.  To implement both the “2 for 1” and the “net zero” rules, agencies will be required to navigate several major challenges, some resulting from the Order and related guidance itself, and others inherent to the laws and conventions of the federal regulatory system.

On the face of it, the “2 for 1” rule – repealing 2 regulations for each new regulation — is both clear and significant.  But how do we count “regulations”?  And how do we look at costs? To understand the challenge, let’s review how federal regulations are published and organized. Like many seemingly easy ideas, the transition from concept to execution can be a challenge.

When an agency wants to change a regulation or wants input from the public on a possible change, it must publish a notice of the change in the Federal Register (FR). Whether the change is to make the regulation more restrictive or less restrictive is irrelevant. FR notices typically include background information, such as history and legal authority, various options that were considered or are being considered, a summary of public comments and economic impacts, and the actual regulatory language.  Final regulatory text is officially recorded by the Government Publishing Office in the Federal Code of Federal Regulations (CFR).  Watchdog groups and scholars often cite the number of pages the FR takes up in a given year, but that metric has little to do with the magnitude of regulation because the FR also includes many other agency notices, studies, public filings, and public meeting announcements. The number of words in a regulation is also far less important than what the regulation does.

Within the existing framework, how would an agency start offsetting one (or two) regulations for another?  The January 30 Executive Order defines “regulation” to exempt rules related to national security and to include Agency policy, interpretation, and guidance documents.  The OMB Interim Guidance uses to the term “regulatory action” rather than “regulation” to make it more intuitive that it may include the rollback of guidance.  Additional clarification is sure to follow, but any such “2 for 1” approach without additional guidance is inherently prone to manipulation and mischief, and may distract from the president’s goal of identifying and repealing “outdated, ineffective, or unnecessary regulatory actions.”

The second provision of E.O. 13771 – the “net zero” regulatory burden requirement – is the more substantive provision intended to focus attention on eliminating “unnecessary regulations.”  The OMB Interim Guidance suggests that the Acting OIRA Administrator sees the overall regulatory burden as the core issue and metric.  While the current guidance addresses only pre-September 30, 2017 regulatory actions, the general provisions or something like them are likely to be extended.

The OMB Interim Guidance clarifies that the “2 for 1” and “net zero” provisions apply only to “significant” regulatory actions, which generally means regulatory actions that have an effect of $100 million or more on the annual U.S. economy.  In addition, the OMB Interim Guidance clarifies that the Order applies only to regulatory actions taken by executive departments, and not to independent regulatory agencies (e.g., FTC, NRC, and FCC).   According to the OIRA web site, there were 77 such actions between October 1, 2015 and September 30, 2016.  Given the emphasis on offsetting new significant rules, an agency may need roll back two, three, or more lesser regulatory actions to offset $100 million or more in cost impact of a new significant regulation.  This would likely be the case no matter how we count regulatory actions.  On the other hand, if an agency comes up with a single deregulatory action that would fully offset the impacts of a significant regulatory action, it is hard to imagine that OMB would not exercise its authority to grant a waiver to the “2 for 1” provision.

Another interesting and important aspect of the OMB Interim Guidance is the emphasis on and suggestions for conducting new cost analyses to account for savings from deregulation.  The guidance essentially disallows reliance on past Regulatory Impact Analyses (RIAs) (i.e., cost-benefit analyses) that would have been required at the time of the original rule (assuming that the original regulation was considered a significant regulatory action).  The guidance implies – and it is reasonable to assume – that the data in past RIAs may be outdated.  However, one might expect a reference in this area to the provisions of Executive Order 12866 or OMB Circular A-4, which are the documents that require and specify the details of how agencies must analyze the costs and benefits in an RIA for a proposed significant regulation. Both of these documents remain in force according to the guidance.   In the OMB Interim Guidance, instead of referring to previously conducted cost-benefit analyses, agencies are “strongly encouraged to use program evaluation and similar techniques to determine the actual costs and other effects of eliminating regulatory actions.” The potential implication of these provisions is that, although retrospective reviews and cost analysis methodology are relatively well established, new and different forms of analysis will be needed to support deregulation.

But why focus on program evaluation and not mention cost-benefit analysis?  The guidance never mentions the societal benefits that might be accruing due to existing regulations (such as improved health associated with cleaner air or lives saved by safety standards).  Perhaps consideration of such benefits is implied within the framework of “program evaluation and similar techniques”, but it is difficult to see how the Administration intends for agencies to address potential benefits from past regulations that might be foregone to achieve regulatory cost savings.  Could the Administration consider only the cost savings and not the loss of benefits that would be associated with deregulation?

Probably not – at least without additional changes to the broader law, policies, and guidance that comprise the federal regulatory system.  Most significant federal regulations are adopted by agencies under the authority or direction of laws enacted by Congress directing agencies to engage in evidence-based rulemaking. This statutory authority provides the basis for any rulemaking, and it typically articulates the societal benefits that Congress hoped to achieve through regulation.  One way or another, this new “2 for 1” regulatory system is likely to require full consideration of costs and benefits for each regulatory action that is part of the package required to maintain the “net zero” cost impact.

Most federal regulatory actions are governed by the Administrative Procedure Act (5 U.S.C. §§ 551-559), which requires agencies to provide ample notice and opportunity for public comment on proposed regulations, and that regulatory decisions be well-reasoned rather than arbitrary and capricious.  Judicial review of regulatory actions generally requires that agencies build a case for regulatory actions, and once having done so courts review an agency decision as it is reflected in the administrative record, which consists of all the information the agency had before it when making the decision.  According to the Supreme Court, an agency must defend and provide a detailed justification for a policy change to the same extent as if the agency were promulgating a new rule.[1]   So while it may not be good enough to rely on past RIAs when Agencies consider “undoing” a regulatory action, federal courts may want to look beyond just the cost savings to consider a full cost-benefit analysis or Cost Effectiveness Analysis (if one was prepared) for the original action now being considered for repeal.

Another way that the well-established federal rulemaking process compels a comprehensive analysis of costs and benefits of each component of the overall “net zero” regulatory burden requirement is through the RIA that will be required of the new significant regulatory action that is to be offset by repealing 2 past regulatory actions.  OMB Circular A-4 directs Agencies to select an appropriate baseline against which to compare costs and benefits of regulatory actions.  Such a baseline needs to reflect how the world would likely look absent the regulatory action.  If the new regulatory action is bundled with deregulatory or streamlining actions in the same regulatory program, then the costs and benefits of the repealed or streamlined regulation would need to be considered either as part of the new regulatory action or as a change to the regulatory baseline for the new regulatory action.

The new Executive Order and related guidance, particularly the “net zero” cost impact provision, further complicate and add uncertainty to the regulatory process.   The administration has clearly raised the bar for getting new regulations through OMB.  However, because of the Administrative Procedure Act and the rules for justifying all regulatory actions (both regulatory and deregulatory), efforts to repeal regulations should consider both the costs and the benefits of past rules, despite the cost emphasis in the January 30 Executive Order and OMB Interim Guidance.  While many uncertainties remain about how this will play out, it is clear that agencies are being encouraged to think big and broadly about how to achieve regulatory objectives most efficiently, and to take a hard look at past regulations for opportunities to make them more efficient and effective.

Gary Light is Senior Vice President for ICF and an expert in developing and evaluating regulatory and policy options and programs. His expertise centers on integrating engineering, economic, and legal principles with information technology to solve complex public policy challenges. In addition to providing project, program management, and advisory services, Gary is a cocreator of CommentWorks®, ICF’s commercial Web-based application for managing public comments. 

 

[1] Motor Vehicles Manufacturers Association v. State Farm Mutual Automobile Insurance Co, 463 U.S. 29 (1983); Federal Communication Commission v. Fox Television Stations Inc., 556 U.S. 502 (2009).

Tagged , , , , ,