Trump takes another swipe at regulations
Spring cleaning has already begun at the White House, starting with a dizzying clutter of federal regulations. Last Monday, President Donald Trump signed an executive order that fulfills a campaign promise: For every new federal regulation, two must be removed—a concept commonly known as “pay-go.” This potential was mentioned last week as a possibility, but has been made official by the recent executive order.
It also calls for a regulatory budget system, where the president will be able to put annual caps on the total regulatory costs imposed on the private sector.
For fiscal year 2017, the order calls for enforcement of the “pay-go” policy and requires that the total “incremental cost” of all new regulations to be finalized this year is to be no greater than zero. While no definition is provided for the term “incremental cost,” the clear intent of the order is that, for 2017, the cost of added regulations to the private sector must be offset with the repealing of existing regulations.
In future years, the president will set the level of total allowable cost of added regulations per year. In some years, he may decide on a net decrease in regulatory cost. Each year, all agency heads will be required to submit to the Director of the Office of Management and Budget (OMB) a cost estimate for the regulations they plan to introduce, as well as a list of regulations that could be repealed and their accompanying cost savings. Their plans must accommodate the president’s cap on cost.
The order exempts regulations regarding military, national security and foreign affairs function; regulations related to agency organization, management or personnel; and “any other category of regulations exempted by the [OMB] director.”
The order retains the Clinton-era concept of the “Unified Regulatory Agenda,” an annual report of all agency regulatory plans intended to help the President and the public keep tabs on major agency actions. Unless otherwise required by law or approved by the OMB Director, the order reads, “no regulation shall be issued by an agency if it was not included on the … Unified Regulatory Agenda as required under [Clinton’s] Executive Order 12866…” Other concepts brought up in the order are not new. The 2-for-1 pay-go system has been put to use in a handful of other countries.
“While focusing in different costs, the use of a pay as you go rule seems to have delivered good results, at least in Canada and the U.K.,” says a 2015 research paper by George Washington University’s (GWU) Regulatory Studies Center. The paper says the U.K. also considered implementing a system akin to Trump’s regulatory budgeting (capping regulatory costs) system, but dropped the idea in 2009.
Current regulatory climate
The data shows that a good regulatory housecleaning is overdue. According to GWU, the Code of Federal Regulations (CFR) reached almost 180,000 pages at the end of 2015. The CFR is the codification of all rules and regulations promulgated by federal agencies. In 30 years, it has more than doubled in size: It was just over 71,000 pages in 1975.
According to the Heritage Foundation, the Obama administration was responsible for an “unparalleled expansion of the regulatory state,” including 229 major regulations since 2009 at a cost of $108 billion annually (using the regulatory agencies’ own numbers). Obama’s Environmental Protection Agency (EPA) is responsible for the lion’s share of that cost, amounting to about $54 billion between 2009 and 2015.
While it remains to be seen which regulations will get the broom under the Trump administration, the president has made remarks decrying the EPA’s “Waters of the U.S.” rule, its Clean Power Plan, and other EPA regulations.
Other proposed regulations important to the livestock industry, the Grain Inspection, Packers and Stockyards Administration (GIPSA) “Farmer Fair Practices” rules, could also be dead on arrival, some say. The controversial pending rules define “unfair” conduct by meat processors and drop proof-ofharm requirements on producers alleging unfair packer treatment. Their estimated cost to industry hovers at around a half-billion dollars over the course of 10 years.
Similarly to Trump’s earlier presidential memorandum temporarily freezing federal regulations, this new order places a lot of responsibility in the hands of the Director of OMB. Trump’s nominee, former Rep. Mick Mulvaney (R-SC5), is known for his unwavering fiscal conservatism. At a recent Senate confirmation hearing (as reported last week), he appeared supportive of Trump’s promise to slash 75 percent of existing regulations.
If confirmed by the Senate, under this latest order, Mulvaney would now be charged with approving regulations during the presidential budget process; communicating the total allowable regulatory cost to agency heads each year; directing the agencies how to measure costs on existing and proposed regulations; creating standards for determining what qualifies as “offsetting” regulations; and deciding how to handle emergencies that might justify individual waivers.
Though Mulvaney’s confirmation by the Senate was expected to occur last Thursday, that had not yet occurred by press time. — Theodora Johnson, WLJ Correspondent