(Bloomberg) — President Donald Trump set a daunting goal for government agencies bound by complex procedures, ordering his department heads to kill two regulations for each new one they issue.
The two-for-one order is “a big one,” Trump said as he signed the directive Monday while surrounded by small-business executives in the Oval Office. Fulfilling the promise, which he made shortly after his election, may prove more difficult than signing an order.
“It’s going to be hard to implement, just because changing rules involves going through detailed administrative processes and soliciting public comment,” said Darrell West, director of governance studies at the Brookings Institution in Washington. “So it’s not a situation where an agency head can come in and kill a regulation overnight.”
Eliminating a regulation is itself a regulatory process, one that involves months of work that can include vetting multiple rule drafts and reacting to thousands or even millions of comments from industries, trade groups and individuals. The process generally takes months, and can be challenged with a lawsuit by aggrieved parties.
Monday’s action is another example of how the White House under Trump seeks to upend standard Washington practice in areas as diverse as immigration, lobbying, border security and the structure of the national security apparatus. Trump also said he’s determined to go after the 2010 Dodd-Frank banking overhaul law because he believes it has made it extremely difficult for businesses to get loans.
“The president’s order is a good first step on the long road toward eliminating ball-and-chain regulations so small businesses can create jobs and expand the economy,’ said Juanita Duggan, president of the National Federation of Independent Business. “The extraordinary costs and complexity of regulations fall hardest on America’s small and independent businesses.”
Under the executive order signed Monday, for each new rule created, federal agencies must identify at least two to be repealed, and the total incremental cost of all new regulations needs to be zero, according to the directive. The order doesn’t apply to military, national security, and foreign affairs functions.
Much is left undecided. The directive tasks Trump’s yet-to-be-named Office of Management and Budget director with deciding what constitutes a regulation, whether more exemptions should be made and even if it should be phased in.
Budget Director
Federal agencies and departments will identify the regulatory targets for proposed elimination under their jurisdiction, and the White House will have the final say, according to senior administration officials who spoke on condition of anonymity.
“Particularly in the environmental area, you can’t just make a change,” West said. “You have to demonstrate that the costs outweigh the benefits if you want to kill something, so that involves looking at health risks and the economic impact of regulations."
To carry out the president’s intent, agencies would need to write a regulation that kills two rules, said Jeff Holmstead, a partner at Bracewell LLP who is a former assistant administrator at the Environmental Protection Agency.
Holmstead said he believes that over time "they’ll figure out an implementation strategy that makes some sense of these."
“President Trump’s executive order helps bring the nation’s regulatory regime into the 21st century by putting regulators on a budget, and addressing the costs agencies can impose each year,” House Speaker Paul Ryan said in an e-mailed statement.
Canada, the United Kingdom and Australia offset new regulations by removing old ones, Marcus Peacock, a distinguished research professor at the George Washington University Regulatory Studies Center, wrote in a December research paper. Those schemes are one element of broader initiatives, such as assessing the hardship imposed by each rule.
"Unlike just counting the number of regulations, using the cost of additional paperwork at least measures some of the burden regulations impose on the economy," Peacock wrote.
James Gattuso, a senior fellow in regulatory policy at the Heritage Foundation, a Washington-based group that favors limited government, said Trump’s rule doesn’t obviate the need for wider action.
“It wouldn’t hurt. It certainly sends a message," Gattuso said. “I worry that this is a bit of a gimmick instead real change." He said it could be hard to find a rule with a cost of $1 billion that can be killed, to offset a major new rule with a similar cost.
Higher Barriers
Higher barriers to implement new rules, and periodically culling old rules may be effective, Gattuso said.
The Federal Aviation Administration enacts dozens of regulations a month to require critical repairs on aircraft. While Trump’s directive permits the budget director to exempt a category of rule from the two-for-one requirement, it’s not clear what would apply to the FAA’s safety actions.
“Are we really going to prohibit the FAA from putting out urgently needed rules for flight safety, which is their mandate?” said Steven Wallace, a former agency official who oversaw accident investigations and helped draft some regulations.
‘Radical’
Amit Narang, regulatory policy advocate for the consumer advocacy group Public Citizen, called Trump’s order “radical and unworkable.”
"There are a lot of very important regulations that still need to come out from the Trump administration," such as tightened standards for lead content in drinking water expected from the EPA this year, Narang said. “That looks like it is going to have to be shelved unless they can find two rules to get rid of — and it’s not clear what those rules would be.”
"It’s just going to lead to a new era of deregulation and corporate self-regulation. We saw how badly that worked out for the public with the financial crash, the BP oil spill, chemical spills and explosions across the country,” Narang said. “That is a preview of what we expect to happen again under the impacts of this effective."
Cass Sunstein, former administrator of the White House Office of Information and Regulatory Affairs under President Barack Obama, in a November article said the idea of "one in, two out has rhetorical appeal, but it’s going to extremely hard to pull off."
Writing for Bloomberg View in November, Sunstein said a blunt, government-wide approach would not recognize the distinctions among agencies, some of which are writing rules with big benefits, and some of which have chaff to cut.
The regulatory overhaul is more effective if it focuses on the cost of new mandates, Sunstein said. "If you’re imposing $1 billion in costs but eliminating two regulations whose total cost is $10,000, you get ‘one massive rule in, two tiny rules out’ — hardly what Trump has in mind," Sunstein said. "What most matters is the cost of rules, not the number."
Bloomberg News by Todd Shields and Jennifer A. Dlouhy
