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On Monday, President Donald Trump signed an executive order that, he says, would force federal agencies to scrap two older regulations for every new one they propose. “So if there’s a new regulation,” Trump said, “they have to knock out two.”
It’s a bold claim. But it’s not clear that things will actually work this way. The order itself has some sizeable loopholes, and experts say it’s far more likely to create confusion within federal agencies than lead to massive deregulation. Jody Freeman, a law professor at Harvard, calls it “arbitrary” and “not implementable.”
For one, Trump’s order doesn’t absolutely require that agencies repeal two older rules for every new one they propose — it asks that they “identify” two rules to be revoked and find ways to offset costs of new rules. Second, many existing federal regulations are in place because of laws passed by Congress; the White House can’t just force any of those rules to be repealed by fiat. Indeed, Section 5 of the order says it can’t override “the authority granted by law to an executive department or agency." That could significantly undercut Trump’s promises here.
But the order’s not meaningless, either. The mere existence of a perplexing directive like this, experts say, could bog down work at various regulatory agencies like the Environmental Protection Agency or Food and Drug Administration. “It is primarily an instrument for hassling the agencies and slowing the regulatory process,” says Freeman via email. And for Trump, that might be good enough.
Why Trump’s regulatory order could prove difficult to implement
To see how this order might work, let’s look at the EPA, the source of some of the most economically significant federal regulations around. The EPA doesn’t just regulate on pure whim. It takes its cues from various laws passed by Congress, such as the Clean Air Act, that require the agency to constantly update new standards on pollution to reflect the latest science, often on a set schedule.
So let’s say the EPA needs to issue revised air-quality standards, as required by law. Under Trump’s executive order, the agency would be asked to “identify” two older regulations that could be revoked. But, of course, many of those older regulations were also required by law — and if the EPA initiated a rule-making process to get rid of them, states and environmental groups would challenge them in court, as John Walke, a senior attorney at the Natural Resources Defense Council, pointed out.
Now, Trump’s order does include a caveat that agencies can only act “to the extent permitted by law.” “So, in the end, this order may not block rules that are legally required by statute,” explains Freeman. “A president can’t order his executive agencies to disobey the law.”
But if that’s the case, the EPA would be caught between two imperatives: required by law to issue new regulations and directed by the White House to get rid of rules it can’t actually get rid of. It’d be a bewildering state of affairs.
“It basically projects a large shadow over all the rule-making agencies,” says Rob Verchick, an environmental law professor at Loyola University New Orleans and former EPA official. “It’s only going to create more and more confusion within agencies — and produce more and more lawsuits.”
Will Trump’s order downplay the benefits of new regulations?
Then things get even more complicated. Trump’s order also tells the EPA and other agencies that, for fiscal year 2017 (which started last September), “the total incremental cost of all new regulations, including repealed regulations … 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.”
It’s still murky how this will work in practice; OMB will have to issue further guidance to the agencies and clarify what “total incremental cost” entails. But one possible read here is that agencies will have to offset the cost of new rules by cutting regulations with equivalent costs elsewhere — without regard to the benefits of all these rules.
If so, that would be a huge deal for an agency like the EPA. When its regulators are crafting new pollution rules, they typically count up both the compliance costs for polluters and then weigh those against the public-health benefits of lower pollution. For may EPA rules, the benefits vastly exceed the cost. But if Trump is telling agencies to focus only on offsetting costs, it will be far more difficult to issue new environmental or public health rules.
Note that other countries approach this issue differently. The United Kingdom and Australia also have their own regulatory offset programs, in which older regulations need to be axed as new ones come in. But as Marcus Peacock of the George Washington University Regulatory Studies Center explains here, both countries consider the “net cost” of regulations — weighing costs against benefits.
We’ll have to wait and see how Trump’s OMB actually handles this question. But Verchick suspects that the ultimate impact of this rule, and the fog around it, could be to pressure regulatory agencies to be less aggressive in setting new standards. “Even when a rule is required by statute, rule-makers often have discretion to choose between aggressive and not-so-aggressive standards,” he explains. “Usually the aggressive standard has higher compliance costs, but also higher benefits to the public. So if this order sends the message that all we care about is compliance costs, that gives rule-makers a strong incentive to worry more about the cost to industry and not the benefits.”
Further reading
- If you want to see a defense of a “kill two regs for every new one” concept, this paper by Marcus Peacock is a place to start. Note, however, that he suggests handling things in a more complex and nuanced way than Trump’s team appears to have done. (For example, the United Kingdom exempts several types of rules from its process, such as rules to address civil emergencies or to address systemic financial risk.)
- For a more detailed case against the 2-for-1 rule, see this new post by Jody Freeman, and this post by Ken Kimmell, the former commissioner for Massachusetts’ Department of Environmental Protection.
