Outlook 2017: Reality of Removal Will Temper Trump Dereg Plans

By Cheryl Bolen

Candidate Donald Trump promised sweeping deregulation in 2017, but as president he will find the realities of legislating and business interests radically tempering those ambitions, analysts and administration officials told Bloomberg BNA.

The newly emboldened Republican majority has pledged to help deregulate through generous use of the Congressional Review Act. House Speaker Paul Ryan (R-Wis.) plans to slow future regulation by passing several regulatory overhaul measures in the opening days of the 115th session of Congress. And Trump has promised to eliminate two existing regulations for every new rule.

Yet even with majorities in both chambers of Congress, Republicans are still constrained by the filibuster in the Senate, the Administrative Procedure Act, judicial review, the congressional calendar and competing legislative priorities, among other limiting factors.

“When people are looking for two rules to remove for any new rule they want to do, there will be a very tough reality that gets faced,” Howard Shelanski, the administrator of the Office of Information and Regulatory Affairs, said in an interview.

"[They] will be faced with the choice of not doing a new rule that responds to a real need or a statutory mandate, or repealing rules that are still doing a lot of good,” Shelanski said. “And for which, I might add, there is probably not a big constituency for repeal.”

Chamber Priorities

“In his efforts to repeal existing regulations, President-elect Trump will have the power to quickly undo some of President Obama’s executive orders by issuing executive orders of his own,” said Tom Donohue, president and CEO of the U.S. Chamber of Commerce, in a Dec. 12 statement.

Other regulatory changes will require going through the lengthier and more complicated rulemaking process, Donohue said.

“The Chamber is already working with transition officials to identify priority areas where relief is most urgently needed,” he said.

The Chamber is urging immediate action to undo the Department of Labor’s fiduciary rule, issued in April, as well as the Environmental Protection Agency’s Waters of the U.S. rule, which was finalized in May 2015, Donohue said. “These are just two on a long list of contenders,” he said.

Regulatory Accountability Act at Top

William Kovacs, senior vice president for environment, technology and regulatory affairs at the Chamber, called for passage of the Regulatory Accountability Act, which he said would require agencies to invest more effort earlier in the rulemaking process.

“The key to the RAA is that it does not dismantle the regulatory state,” Kovacs said. Rather, the bill differentiates between general regulations and high-impact or transformative regulations that have a nationwide impact on jobs and the economy, he said.

By focusing only on high-impact, transformative regulations, Congress can control overreaching regulations while allowing the day-to-day operations of agencies to function, Kovacs said.

Not So Easy

Wide-scale deregulation, however, will not be easy. Every jurisdiction, including the U.K. and Canada, that has tried to launch a serious retrospective review effort or one-in, one-out effort has run into the same problem, which is, it is difficult to find meaningful rules to cut, Shelanski said.

The biggest challenge in trying to pull rules off the books, or even to modify rules, is that there isn’t a big constituency for removing preexisting rules, either on the business side or on the beneficiary side, Shelanski said.

Obviously, beneficiaries don’t want to lose rules that are benefiting them, Shelanski said. And for business, once the costs of coming into compliance have been absorbed, the incremental or ongoing costs of compliance, in many cases, are rather low, he said.

“Indeed, they have often accommodated their systems and their management to the point that it would actually be costly to change the regime,” Shelanski said.

Congress Has a List

Sam Batkins, director of regulatory policy at the American Action Forum, outlined several rules that are likely to be the target of elimination in the next Congress, either through the Congressional Review Act, legal challenges or through other legislative means.

The Congressional Review Act (Pub. L. No. 104-121) became law in 1996 as part of the “Contract with America,” a pledge made by the then-new Republican House that included easing the regulatory burden. The law gives Congress 60 days after a rule is issued for both chambers to pass a joint resolution nullifying the regulation. The joint resolution is not subject to Senate filibuster.

In terms of specific regulations that Congress is likely to target, the first is DOL’s overtime rule, finalized in May, followed by the EPA’s endangerment finding in July that emissions from certain types of aircraft engines contribute to the pollution that causes climate change, Batkins said.

There’s also the EPA’s fuel efficiency standards for heavy-duty trucks finalized in August that would be subject to a CRA resolution of disapproval, Batkins said. This would more or less preclude the EPA from going back to the well on efficiency standards for trucks, he said.

“And there are of course rumors that Congress would look to remove EPA’s authority under the Clean Air Act to regulate greenhouse gas emissions,” Batkins said. “Obviously all of that would be subject to filibuster, unlike a CRA,” he said.

A Dozen Rules at Risk?

It is unlikely Congress would target more than 15-20 regulations, Batkins said, and other analysts predicted far fewer, given the legislative priorities of the incoming administration and up to 10 hours of debate time per rule in the Senate for CRA resolutions.

Rules that could be subject to rescission include the Department of Transportation’s drone rules finalized in June, Department of Interior regulations finalized in July on drilling in the Arctic outer continental shelf and the DOL’s fair pay and safe workplaces rule finalized in August, Batkins said.

Meaning of Substantially Similar

Congressional Democrats and public interest groups have long opposed use of the CRA, in part because it is perceived as a “nuclear bomb” on the regulation it rescinds. Once a rule is repealed, the CRA prohibits agencies from issuing a “substantially similar” regulation in its place.

Susan Dudley, director of the Regulatory Studies Center at the George Washington University, said this feature of the CRA is likely to give lawmakers pause before using the law, given its “Draconian” outcome.

The CRA has only successfully been used once in its 20-year history, to rescind a Clinton-era regulation on ergonomics. To date, the definition of “substantially similar” in this context has not been litigated.

Still, the Occupational Safety and Health Administration has never gone forward with another ergonomics regulation, Dudley said.

“You could understand they might not have during the eight years of the Bush administration, since he had signed the disapproval, but we’ve had another eight years in the Obama administration and they’ve never renewed that,” Dudley observed.

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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