Trump Executive Order Requires Cutting 2 Old Rules For Every 1 New Rule, But Is It That Easy?

Image courtesy of Chris Wilson

This morning, President Donald Trump signed an executive order that is being described as “two out, one in,” meaning that for each new federal regulation, two existing rules are to be cut. While it might seem like a simple concept, the reality is quite different.

While the White House is claiming that this order (full text at the bottom of this story) is about slashing onerous federal regulations, the more likely effect is a slowdown on new rules. That’s because the process for undoing and revising existing rules can be just as time-consuming as creating new ones.

The Administrative Procedures Act (APA) provides what is effectively a 4-step process for the executive branch agencies when crafting new federal regulations.

1. Issue a notice of proposed rulemaking: This is when the agency tells the world, “Hey we’re thinking about issuing a rule to do XYZ” with some general details and goals.

2. Get comments on this rule: This is when the public and other various stakeholders in a proposed regulation chime in, filing comments that the agency is then supposed to take into consideration before moving on to the next step…

3. Issuing the final rule: These are the text-heavy beasts — sometimes hundreds of pages — that get into the nuts and bolts of the regulation. Understanding the finer points of these rules (and how to sidestep them) is why corporate lawyers often make very good money.

4. Publishing and setting an effective date: For a finalized regulation to be official it first has to be published in the Federal Register, and even then there is at least a 30-day window before it goes into effect.

Doing It Over Again

The APA doesn’t spell out a separate process for undoing a rule, but the law does define “rule making” as the “agency process for formulating, amending, or repealing a rule.”

In 1982, the Court of Appeals for the D.C. Circuit ruled in Consumer Energy Council v. FERC that, via this definition, the APA “expressly contemplates that notice and an opportunity to comment will be provided prior to agency decisions to repeal a rule.”

In other words, that means that repealing an existing rule requires the same process. And since the just-signed executive order mandates that two current rules must be targeted for repeal, that would mean that introducing a single new rule would actually mean going through the rulemaking process three times.

Even an expedited rule requires several months to go through the notice, comment, and finalizing process. Complicated new rules can take more than a year before being finalized.

Zero-Sum Game

If you establish a new regulation, under this order, it’s not simply a matter of finding two pieces of low-hanging regulatory fruit that could arguably be sacrificed to make way for the new rule. The order specifies that for this fiscal year, the net incremental cost of all new regulations must be “no greater than zero.”

That means that the eliminated rules must at least offset the cost of the incoming rule. Regulatory experts we spoke to said that this raises concerns about eliminating existing regulations based on their cost rather than their effectiveness.

Unstoppable Rules

Some rules are required by existing law, and these may fall outside the control of this order. If an agency fails to draft a regulation that is required by an existing statute, the agency can be sued and a court can compel the government into following through on its legal obligation.

The order does allow for exceptions to the 2-for-1 requirement, in case of “emergencies and other circumstances that might justify individual waivers.”

There is currently a freeze on all new and in-progress rules in the Executive branch agencies. This is a common practice whenever a new administration moves into the White House.

What remains to be seen is if the 2-for-1 requirement will apply to only entirely new rules or also to in-progress rulemaking.

“Cartoonish & Unsophisticated”

While the White House and the order’s supporters contend that it’s a boon for American business, a number of consumer advocates say that this new requirement is a disaster for consumer protections.

Robert Weissman of Public Citizen called today’s order an “arbitrary attack” and contends that the Trump White House will likely use the 2-for-1 requirement to gut a wide array of rules protection our finances, food, and environment.

“This unprecedented and untested measure will gut the enforcement of wildly popular and successful laws including the Clean Air Act, the Clean Water Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Food Safety Modernization Act, the Pipeline Safety Act and many more,” writes Weissman. “It’s horrifying that even after the Wall Street crash, the massive BP oil spill and numerous other public health and safety disasters across the country due to a lack of strong regulations, Americans will once again have to pay the price for the consequences of corporate recklessness, greed and lawbreaking.”

Laura MacCleery, vice president of consumer policy and mobilization for our colleagues at Consumer Reports, argues that it is the government’s role to set reasonable regulations that protect consumers from dangers like predatory lending, dirty air and water, foodborne diseases, and unsafe medications.

“This order is telling federal agencies to trade off one rule that improves health or safety for two other rules, and that does not make sense,” says MacCleery. “This order will require rules that impose no more costs on companies, but without accounting for critical benefits to the public that exceed the costs. That means agencies will have to put corporate costs before Americans’ well-being. This is a two-for-one deal that just doesn’t work for consumers.”

Instead, says MacCleery, the White House should be pursuing “constructive measures to reduce delays and costs, while valuing important protections for consumers.”

Michael F. Jacobson, Executive Director at the Center for Science in the Public Interest, says that this is just deregulation for the sake of deregulation.

“It’s fair to assume that this latest edict was not run by any of the agencies that actually do the serious business of regulating,” contends Jacobson. “If it were, Trump might have learned that not all regulations are reflexively opposed by the businesses affected by them. Certainly in the food safety world, responsible business leaders supported the Food Safety Modernization Act, which required the writing of new regulations that keep produce, packaged foods, and imports safe.”

He continues, “Rather, this executive order springs from a cartoonish and unsophisticated view of the regulations that keep our air clean, our water potable, our food safe, our planes from crashing, and so on, and ignores the public health benefits of those rules.”

Legislative Shortcuts

As we’ve mentioned in recent months, the new Congress is expected to deploy the Congressional Review Act (CRA) to quickly dispatch a number of recently finalized rules.

The CRA is a little-used law from 1996 that gives lawmakers a brief window to review and, if necessary, voice their disagreement with any newly finalized major regulations. If the House and Senate sign off on a joint resolution of disapproval on a regulation and the President signs it, then the rule is rolled back.

Expect to see several attempts to use the CRA to undo regulations issued in the final months of the Obama administration. Last week, the cable and telecom industries urged congressional leaders to use the CRA to get rid of the FCC’s new broadband privacy rules that were finalized shortly before the election.

[NOTE: Text updated to include MacCleery statement.]

=====Full Text Of Executive Order ====

EXECUTIVE ORDER

– – – – – – –

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.

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.

(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).

(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.

(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.

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(c) of this order, and provide the agency’s best approximation of the total costs or savings associated with each new regulation or repealed regulation.

(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.

(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;

(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.

DONALD J. TRUMP

THE WHITE HOUSE,
January 30, 2017.

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