Trump’s 2-for-1 Regulatory Policy Yields Minimal Results

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By Cheryl Bolen

President Donald Trump’s groundbreaking executive order that requires agencies to eliminate two rules for every new rule they issue has yielded just three regulations that aren’t exempt, out of more than 200 rules issued so far.

In May, the Food and Drug Administration issued a food labeling rule, followed in August by two rules from the Centers for Medicare and Medicaid Services that were identified as new regulatory actions in need of offsets.

Agencies have been better about finding savings, with 11 rules identified so far as deregulatory actions under Executive Order 13,771, Reducing Regulation and Controlling Regulatory Costs.

“I was a bit skeptical at first, but it seems that now [agencies are] going forward with it in a real way,” said Dan Goldbeck, a research analyst for regulatory policy at the American Action Forum.

Most Rules Exempt

As of Sept. 29, the last business day of fiscal year 2017, a total of 205 rules had been published in the Federal Register containing the search term EO 13,771, according to an analysis by Bloomberg BNA.

That figure includes the three regulatory actions identified as needing offsets, the 11 deregulatory actions, and 108 rules published by the Coast Guard related to local events, such as fireworks displays or drawbridge openings. The Coast Guard rules are not significant and don’t have to comply with the executive order.

Agencies likewise identified 53 of the remaining 83 rules as not significant and therefore exempt from the executive order. The other 30 rules fell into one of 10 categories for full or partial exemption from the order, with partial exemptions meaning they could be offset later.

Massive Shift Ordered

Trump first charged into office vowing to slice burdensome regulations by as much as 75 percent, and imposing a freeze on all pending rules on Jan. 20, his first day in office. Just 10 days later, he ordered a massive shift in the way agencies regulate by requiring two deregulatory actions as well as offsetting savings with all new rules.

The order quickly drew a lawsuit from a coalition of public interest, environmental, and labor organizations. U.S. District Court Judge Randolph Moss heard oral arguments in the case on Aug. 10, but no decision has been issued.

The president initially touted the “one-in, two-out” or “two-for-one” executive order as a deregulatory success, yet many questions have been raised by analysts about how it is working in practice.

The Office of Information and Regulatory Affairs, an agency within the White House Office of Management and Budget that reviews all significant federal regulations, issued interim guidance in February and a 17-page document to agencies in April that explained how the order should work.

Exemptions Abound

Contained in the guidance were several definitions, conditions, and full or partial exemptions to the executive order for certain types of rules. Among them, rules that transferred income are exempt from the order, as are rules that impose de minimis costs.

Rules that relate to a military, national security, or foreign affairs function are exempt from the order, and this reason was cited in nine rules issued by Trump administration agencies.

For example, a recent U.S. Customs and Border Protection rule on extending import restrictions on archaeological materials from Guatemala said it is exempt from the order because it involves a foreign affairs function.

Calculating Costs

But these numbers don’t tell the whole story. Goldbeck, who has been tracking regulatory and deregulatory actions by costs, rather than by how the agency identified its own rule, found slightly different data.

For example, a rule issued Aug. 7 to repeal a consolidated federal oil and gas rule was deemed a regulatory action by Goldbeck, with an annual cost of $3.9 million, while Interior’s Office of Natural Resources Revenue identified the rule as a deregulatory action because it said the rule will result in overall savings to industry.

The OMB didn’t provide its own tally of regulations in response to a request from Bloomberg BNA.

Calculating Savings

Agencies also can include savings from legislatively repealed or revised rules, and achieved significant savings from the 14 rules repealed under the Congressional Review Act earlier this year, Goldbeck said.

The primary goal of the order’s first phase is to achieve zero dollars in new, net regulatory costs across the various executive agencies by the end of FY 2017, Goldbeck said in a recent blog post.

Overall, the Trump administration is on track to finish the first phase with $645 million in net annual regulatory savings, Goldbeck said.

Enforcement Unclear

The few rules identified by agencies as requiring offsets may reflect uncertainty about enforcement, with agencies unsure how to comply with the order, said Sofie Miller, a senior policy analyst at the George Washington University Regulatory Studies Center.

This spring, Miller questioned why an Environmental Protection Agency rule published in the June 14 Federal Register wasn’t identified as requiring offsets. The rule set new standards to reduce discharges of mercury from dental offices into municipal sewage treatment plants at a cost of $600 million.

“It seems that when EPA’s dental amalgam rule came out, there really wasn’t any response to that,” Miller said. “So if it worked that one time, maybe it’ll work again.”

“So, it’s unclear. That’s the word that I have chosen to describe the enforcement in general: it has been unclear,” Miller said.

Linkage Unclear Too

Which rules are subject to the executive order and which are being used as offsets was raised during court proceedings this summer.

“I think only a handful of those regulations that have been finalized will require some offsets,” said Brett Shumate, a Department of Justice attorney, in defense of the order in court. But it is “unclear” whether the agencies have already identified what those offsets will be, he said.

“That may come later,” Shumate said. “I think all OMB will care about is at the end of the fiscal year that there’s a net zero cost,” he told the court.

When asked by the judge if the public will know how many actions subject to the executive order have been identified and what their relevant offsets are, Shumate said the unified regulatory agenda may provide some helpful information.

“But whether that will provide the public with information about the linkage between the regulatory and deregulatory actions I just don’t know,” Shumate said.

Shift in Mindset

In August, Neil Bradley, senior vice president and chief policy officer at the U.S. Chamber of Commerce, told Bloomberg BNA that lack of political leadership at the agencies was hampering the administration’s regulatory agenda, including implementation of the executive order.

“I don’t know that we fully know how that’s going to play out in practice,” Bradley said.

Still, the business community has already seen the benefit from the executive order because agencies now have the sense that they have to go back and look at their existing rules to figure out what needs to be changed or eliminated, Bradley said.

“Even if it doesn’t precisely work out two-to-one, that shift in mindset is incredibly important, because for the first time people are actually thinking about the cost of the cumulative effect of regulation,” Bradley 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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