Judge Questions ‘Shadow’ Process in Challenge to Regulatory Order

By Cheryl Bolen

President Donald Trump’s executive order requiring agencies to eliminate two regulations for each new regulation issued and offset the cost of each new rule is “fundamentally different” than previous executive orders guiding agency rulemaking, a federal judge said Aug. 10 ( Public Citizen Inc. v. Trump, D.D.C., No. 1:17-cv-00253, oral argument 8/10/17 ).

Judge Randolph Moss of the U.S. District Court for the District of Columbia heard lengthy oral arguments in a lawsuit challenging Executive Order 13,771 on Reducing Regulation and Controlling Regulatory Costs.

“It’s like a shadow regulatory process on top of the regulatory process,” in that before agencies can act on a new rule, they must consider which other, completely unrelated rules to cut, Moss said.

The lawsuit, filed Feb. 8 by Public Citizen, the Natural Resources Defense Council, and the Communications Workers of America, asks the court to declare that the order cannot be lawfully implemented and to bar federal agencies from implementing the order.

Order Not Implemented Yet

The executive order exceeds the president’s constitutional authority, violates his duty under the “take care” clause of the U.S. Constitution, and directs federal agencies to engage in unlawful actions that will harm countless Americans, including plaintiffs’ members, the lawsuit said.

One complicating factor in the case is that it is unclear whether the executive order has yet been implemented in practice.

Agency guidance issued in April by the Office of Management and Budget contains several definitions and exemptions limiting the number of rules that must comply with the requirements of the executive order.

Since then, OMB Director Mick Mulvaney has publicly identified just one rule that must comply with the order, an Environmental Protection Agency rule to reduce discharges of mercury from dental offices into municipal sewage treatment plants.

The rule was published in the Federal Register on June 14, but did not identify two rules for elimination or identify any offsets. Mulvaney later said new rules and offsets would be considered within each fiscal year.

Effect Is Real

Allison Zieve, director of the Public Citizen Litigation Group, argued in court that the effects of the executive order were real and were causing agencies to delay or withdraw important regulations because they can’t find offsets.

“This executive order is extraordinary” in that it would impose a condition on rulemaking that is unprecedented, Zieve said. Further, the condition of finding offsets as well as two rules to eliminate is not found in any statute, she said.

The order also creates a “lose, lose” situation for Public Citizen, because if it successfully advocates for a new safety regulation from an agency, then the agency must eliminate two other protections, which would hurt its members, Zieve said.

Moss suggested perhaps a slew of old, useless regulations could be eliminated instead, but Zieve said “common sense” shows that to pay for a costly new regulation, other substantial safety regulations would have to be eliminated.

“Paperwork [reduction] isn’t going to get them there,” Zieve said. Neither federal agencies nor OMB have identified which regulations could be used as offsets to pay for new regulations.

This President Is No Different

Brett Shumate, deputy assistant attorney general at the Department of Justice, argued that presidents have been directing agency rulemaking processes for the past 40 years and this president is no different.

Moreover, since the executive order has not been implemented yet, any harm that Public Citizen is suggesting will occur is purely speculative, Shumate said. And, if an agency tried to use an important rule as an offset, the group could challenge the agency’s decision in court, he said.

The president has the authority to guide the agency rulemaking process under Article II of the Constitution, not under a particular statute, Shumate said. He also stressed that no one knows how agencies are going to implement the order.

Still, presidents for decades have been directing agencies to consider costs when regulating, Shumate said.

Moss, however, said that in the past, cost considerations were confined to the rule being written, and did not extend to other, unrelated rules. “That’s the problem,” he said.

To contact the reporter on this story: Cheryl Bolen in Washington at cbolen@bna.com

To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com

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