Dean Krent on the “Two for One” Trump Administration Executive Regulatory Order

By Dean Harold J. Krent

On February 8th, Public Citizen, the National Resources Defense Council, and the Communications Workers of America sued the federal government, alleging that the President exceeded his constitutional authority and violated the Administrative Procedure Act in issuing Executive Order 13771 on Reducing Regulation. The Order directs “executive” agencies to identify for repeal two existing regulations for every new regulation proposed or issued and to ensure that the net costs of any new regulations in combination with repealed regulations not exceed zero. The suit argues that the Executive Order distorts the administrative process by requiring administrative agencies to focus exclusively on costs as opposed to the benefits of regulations, and that only Congress has the authority to direct agencies to prioritize reducing costs.

No doubt, the Executive Order’s two for one mandate seems bizarre against any benchmark for government regulation. Regulations may save lives, prevent injuries, and protect against despoliation of the environment, even when imposing costs. What is the justification for ignoring benefits? Indeed, the mandate seems reductionist—why two regulations identified for repeal as opposed to a mandate that “new” regulations impose no added costs absent identification of existing regulations to repeal?

But, the lawsuit is likely to fail. First, the President historically has shaped agency practice through executive orders, most notably through Executive Order 12866 that both Democratic and Republican Presidents have followed requiring agencies to subject all major proposed rules to a cost-benefit analysis. In other words, Presidents enjoy inherent authority to shape the regulatory activities of executive agencies. And, the recent Executive Order was careful not to apply its mandate to agencies headed by administrators who are insulated from the President’s plenary removal authority. The presidential power to issue an Executive Order stands apart from, but complements, Presidents’ authority to appoint and remove the heads of executive agencies and represents a time honored way for Presidents to pursue priorities during their administrations. Second, the lawsuit sidesteps that the Executive Order specifically states that the Order is in effect only “to the extent permitted by law.” Thus, where Congress directs agencies to promulgate new rules irrespective of costs, agencies must abide by the congressional directive. Thus, although the lawsuit is a stretch, it is unclear how much of a real world difference the Order will make—it is up to agency heads whether they will continue to engage in rulemaking, and to what extent, based on their understanding of congressional direction. Or, agencies may pursue regulatory goals through enforcement actions as opposed to rulemaking. Stay tuned.

Nonetheless, the lawsuit highlights the vacuity of the Executive Order. Under the Administrative Procedure Act, when agencies repeal existing regulations, they must abide by the same procedural restrictions as when enacting them. Thus, they must afford the public notice of an intent to repeal a regulation, invite comments, and then decide whether the agency will go ahead with the repeal pursuant to its congressional mission. Any such repeal is subject to review by courts under the “arbitrary and capricious review” standard under the APA. An agency decision to repeal a regulation because “it had to” in order to satisfy EO 13771 almost certainly will not satisfy that standard: agencies cannot repeal regulations unless they rely on reasoning intrinsic to the statutory framework within which they operate. Thus, the Order may deter agencies from regulating, but the repeal of existing regulations is not so easy to accomplish. President Trump will only succeed in changing the regulatory terrain because of the party or personal loyalty of agency heads as opposed to any mechanistic repeal of regulations as called for in the Order.

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