Trump’s regulatory executive order

Today, President Trump issued a new executive order, which he claimed would reduce the number and impact of federal regulations on private businesses.  Among other things, this executive order would require, in Fiscal Year 2017 (which ends on Sept. 30, 2017), that “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.”  It would also impose new limits on new regulations issued in and after Fiscal Year 2018.  This new executive order raises a number of thorny questions, which include:

  1.   Why does this executive order require consideration of only the “incremental costs” of new or revised regulations, and not the benefits of those regulations.  Yes, we know there are ideological reasons for this new executive order, but is that the only justification?  Presumably, the new Administration favors some new regulatory action, such as possible restrictions on H1-B visas. If ICE were to propose a regulation requiring such action, would it also have to propose repealing two other regulations in order to offset the incremental cost of that regulation?  What if the FDA were to propose a new rule that would protect the public health, with some increase in the cost to food producers?  Would it also have to propose eliminating two other regulations that protect the public health?
  2. Is this authorized by Congress?  Does it need Congressional approval?  While the Reagan Administration required agencies to use a cost-benefit analysis for new rules, it did not require the repeal of existing regulations to offset the incremental cost of those new rules.  Clearly, Congress can overrule this executive order.  But does Congress need to amend the Administrative Procedure Act to impose this new requirement?
  3. The federal government must issue a notice of proposed rule-making, receive comments from the public, and consider those comments both when issuing a new regulation and when repealing one.  See 5 USC 551(5).  (It also must do the same when it modifies an existing rule.)  In Fiscal Year 2017, an agency will need to undergo this elaborate, time-consuming and expensive process for three different regulations whenever it proposes one new rule.
  4. Starting with Fiscal year 2018, each agency will be required to identify each offsetting regulation annually, with the costs or savings associated with each new or repealed regulation.  The Director of Management and Budget will approve the new regulations that each agency can issue; no agency can issue a new regulation unless it receives that approval.  And the Director will impose a limit on the incremental costs for new or repealed regulations.  That allowance could mean a decrease in the agency’s regulatory costs.
  5. This new executive order will have two predictable impacts.  First, it will give vast new powers to the Director of Management and Budget.  That person could decide, for example, that the total regulatory costs for IRS or EPA regulations for Fiscal Year 2018 will be zero, even if that leads to rampant tax avoidance and runaway federal deficits, or if that leads to increased incidents of illness and death.  The agencies would be powerless to overcome those decisions.  And, second, it will significantly increase the workload on federal agencies, even though the Administration has imposed a hiring ban on those agencies.  In other words, Pres. Trump just issued a Full Employment for Bureaucrats rule.
  6. It is not clear that the Trump Administration sought the input of federal agencies before imposing these new limits.  Given its failure to consult with even Homeland Security over its recent immigration changes, it seems doubtful that it did so.

This executive order appears to have been prepared in haste, without regard for the negative impacts of these new limits.  It is likely that its rollout will be chaotic and confusing.