Trump regulatory reforms trigger policymaking but no new rules

February 01, 2018
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President Trump's efforts to overhaul the federal regulatory process – by imposing new cost considerations and limitations on regulators – have prompted policy discussions throughout the government, including in Congress and the courts, along with what some say is the intended consequence of largely halting the development of new regulations.

Trump touted his administration's progress in cutting rules during his State of the Union address, casting the effort as part of an overall governmental reform.

“In our drive to make Washington accountable, we have eliminated more regulations in our first year than any administration in history,” Trump said in his speech to a joint session of Congress on Jan. 30.

“Federal rulemaking has dwindled to a trickle,” said a Democratic source, who argues a shift in focus to finding outdated rules for possible elimination has overwhelmed an already resource-strained federal staff that will leave emerging risks unaddressed and unregulated.

“We're not against regulations, we just want smarter regulations,” countered an industry official who supports Trump's regulatory reforms, while acknowledging they have had a “tremendous impact,” slowing and halting new rules.

When Trump took office last year he immediately suspended the effective date of a number of Obama-era rules, and soon after issued two executive orders setting additional requirements on regulators for issuing new rules. That initial wave of activity, which included the repeal of more than a dozen rules under the Congressional Review Act, has given way to a more arduous process under the Administrative Procedure Act and other federal rulemaking procedures for repealing existing requirements, which could take years to complete.

Yet the impact of those Trump directives has been widely felt throughout the government, prompting debate within Congress and the courts that will likely establish new requirements for rescinding or overhauling existing federal regulations, requirements that future administrations will have to follow for years or even decades to come.

And in the meantime, Trump's deregulation push has already established a cultural shift within the government that has stalled the development of new regulations, while remaining policy questions are being sorted out.

In other words, the short-term effect of the Trump orders is no rules anytime soon. The long-term, institutional impacts will force a debate about and rewrite of the federal procedures for issuing new regulations to promote public health, safety and the economy.

Trump recently described his deregulation agenda within the context of his election victory in 2016, placing it at the center of his economic and governing strategy.

“And I will say this with great conviction, that had the opposing party won, in my opinion -- because they would have added additional regulation to the already tremendous regulations we have -- I believe the markets would have been down anywhere from 25 to 50 percent, instead of being up almost 50 percent,” Trump told world leaders at the economic summit in Davos on Jan. 26.

Ordering controlled costs

Trump's executive orders on controlling regulatory costs – EO 13771 and EO 13777 – issued last January and February, respectively, are intended to set out a process for identifying “outdated” and “unnecessary” rules for elimination before agencies can issue new regulations.

That process for rescinding rules will have to follow long-established procedures under the Administrative Procedure Act, which is where the lingering policy issues will be set, according to sources.

“To revise or rescind an existing rule, an agency has to go through the various steps set out in the APA,” said Sally Katzen, a former Clinton administration official, in an interview with Inside Washington Publishers.

Katzen laid out the hurdles the administration will face in likely court challenges to its proposals for rescinding existing regulations.

“The courts expect an agency to be explicit about what it's doing and why, taking into account what it has done in the past,” Katzen said. “Sometimes this is a very high hurdle, especially when the rule is based on science that has not changed. It takes time, it takes resources, and sometimes it takes ingenuity.”

A former Reagan administration official said Trump's deregulation push will eventually lead to new “case law” covering procedures for rescinding rules, affecting this and future administrations.

“We're going to have an entire new body of law” on how to rescind existing regulations, said John Cooney, who was deputy general counsel for the White House Office of Management and Budget.

He noted that public advocacy groups are already challenging in court the Trump administration's efforts to suspend Obama rules, but a model case has yet to emerge in setting policy precedents.

“We don't have the bellwether case that will determine the rules” for repealing existing requirements “that will guide all future administrations when they think about revoking the rules of their predecessors,” Cooney said in an interview.

One of the most notable challenges has been a lawsuit filed by a coalition of public interest groups led by Public Citizen, which is challenging the president's requirement that agencies eliminate two regulations for each new rule they want to issue.

Trump's order “is revolutionary because it does not just instruct agencies to 'consider factors' that may be consistent with statutes granting them rulemaking power; it imposes a sweeping prohibition on rulemaking absent compliance with repeal and cost-offset obligations that cannot be squared with any extant statutory authority.” the group claims in its lawsuit, which is expected to reach the circuit or Supreme Court level.

The Justice Department, on behalf of the Trump administration, argues the president's 2-for-1 requirement on issuing new rules is simply a normal progression in executive policies for addressing regulatory costs.

“Plaintiffs would have this Court ignore an unbroken 40-year history of Executive Orders directing agencies to consider factors, such as cost, unless expressly forbidden by Congress in a governing statute,” DOJ has argued in the case.

Congressional role

And as litigants hash it out in the courts, lawmakers are poised to take up a Senate bill that would rewrite rulemaking procedures under the APA for the first time in decades.

Congressional sources say the Senate could take up the legislation as soon as late February, which if enacted would resolve some of the issues being raised in court over Trump's suspension of Obama-era rules.

The bill, introduced by Sens. Rob Portman (R-OH) and Heidi Heitkamp (D-ND), would generally impose additional cost-benefit and other review requirements on regulators, and includes provisions to establish a 90-day review process for all rules issued in the final months of an outgoing administration that have not yet taken effect.

The provisions would allow an agency to suspend the effective date of such rules to allow time for additional public comments on whether the pending regulations should be revised or repealed.

A companion bill was approved by the House in January 2017, and the Senate plan cleared a key committee in May with some bipartisan support. Proponents say they expect to pick up enough Democratic support in the Senate to meet the requisite 60-vote threshold and send the measure to the president's desk for signature before the midterm elections.

Trump also has recently called on Congress to enact bipartisan legislation for reforming the environmental and other permitting requirements as part of a broader strategy for funding and upgrading the nation's infrastructure. While the political prospects of such a plan appear dim, the emerging details from the White House are being viewed within the context of an overall deregulation agenda.

Regardless of the outcome of pending and future legal disputes and the prospects for final passage of APA reform legislation, public interest advocates say damage has already been done by Trump's deregulation orders.

Concerns about immediate harm

Public Citizen issued a report in November which catalogs what the group says are significant public harms from the Trump administration's suspension of rulemakings, as laid out in the administration's first unified regulatory agenda issued in July.

“In total, the Trump administration listed 457 rulemakings as withdrawn on its Spring 2017 Unified Agenda. This total is the most of any agenda since 1995, our analysis found,” according to the report, which the group plans to update soon to reflect the latest regulatory agenda issued in December.

“Aside from actions intended to remove regulations already on the books, the administration also has halted work on rulemakings that are being created but not yet completed,” according to the report. “This process, known as withdrawing the rulemaking, can be done very quickly – unlike eliminating an existing rule, which requires extensive procedures.”

“Presumably there is a public safety harm” from the Trump administration suspending the effective date for new traffic safety requirements, for example, said Public Citizen lawyer Allison Zieve in an interview.

Zieve is a lead lawyer in the group's legal challenge to Trump's EO 13771, and noted that unaddressed public risks from the suspension of pending rules will occur “even while we litigate to reverse that decision.”

Meanwhile, industry officials are applauding the immediate effects of Trump's deregulation orders, saying they have already established a cultural shift within federal agencies that will endure beyond the current administration.

“Almost even more than the details and operations of them, the executive orders set the early tone for the agencies and the tone was a deregulatory tone . . ." said the U.S. Chamber of Commerce's Neil Bradley. The orders encourage regulators to "be mindful of the costs you're imposing, and if you're imposing costs, find ways to reduce costs elsewhere” he added.

Bradley said the “results were pretty astounding” for the Trump administration's deregulatory push for its first year in office, and those “results are going to continue.”

Expanded OIRA role

And some see this cultural shift within federal agencies as an opportunity for OMB's Office of Information and Regulatory Affairs to play an expanded role in reviewing and shaping federal regulations.

“[C]entralized regulatory review would not have survived for nearly a half century without a cadre, however small, of individuals who were willing to place their career on the line because the mere existence of centralized regulatory review was at that time repugnant to a number of the leaders of the administrative state who frequently advocated retaliatory measures,” according to Jim Tozzi, who served as a regulatory official in five consecutive administrations from Presidents Johnson to Reagan.

He said an effective OIRA is helpful regardless of whether the sitting administration is pushing a pro- or anti-regulation agenda. “It allows the elected president to implement his agenda,”

Trump's call for OMB and OIRA to develop a “regulatory budget” is unprecedented, according to Tozzi, who supports the move, saying “it's a huge institutional change” in “decreasing the rate of growth of the administrative state.” But he said a lot will depend on the administration's commitment to support OIRA in its central regulatory role.

He said a centralized regulatory review process under OIRA eliminates overlapping efforts by various agencies, ensures regulations are beneficial based on a cost-benefit review, and promotes compliance with statutory requirements. -- Rick Weber (