//  3/17/17  //  Commentary

One of the signature issues of the new administration is an effort to reduce the size and authority of the administrative state, and in particular to reduce the number of regulations it implements.  The President took some of his first concrete steps toward this goal on January 30, 2017, when he issued his “one in, two out” Executive Order (EO).  As he stated in his address to Congress at the end of February, the rule “mandates that for every one new regulation, two old regulations must be eliminated.”  But he declined to mention that OIRA has issued a guidance document implementing the EO, which walks back many of its key provisions.  In short, OIRA’s guidance 1) limits what counts as a “regulation,” 2) doesn’t even apply the EO to every new “regulation,” and 3) does not actually eliminate two old regulations for each new one. 

Let’s begin on January 30, when the President issued the EO requiring that “for every one new regulation issued, at least two prior regulations be identified for elimination.”  The first question, of course, is what the EO means by “regulation.”  That term clearly includes traditional APA notice-and-comment rulemaking (the EO specifically calls out situations when an agency “publicly proposes for notice and comment” a regulation).  The EO also provides this broader definition: “For purposes of this order the term ‘regulation’ or ‘rule’ means an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency.”

This sounded to me (and many others) as if it included guidance documents, which are used extensively by agencies to set and implement policy.  To be sure, it is not always clear what counts as a guidance document, and it is not always clear whether agencies are attempting to use guidance to circumvent the notice-and-comment rulemaking process.  But by many common definitions (including those put forth in executive orders by the Bush Administration), the term “regulation” as defined in this EO would seem to include guidance documents.

At the time, the EO was derided by leading law professors and administrative lawyers as “gimmicky” and “sheer idiocy,” with commentators (including me) arguing that the order failed to understand the process of regulation.  Many regulations are required by statute, not driven internally by the agency.  Other regulations are in fact deregulatory, easing regulatory burdens by creating safe harbors or exercising enforcement discretion.  Still other regulations merely provide information to the regulated industry in a way that decreases uncertainty. 

In my own area of study—the FDA—new food additive approvals are issued as rules.  Do two additives need to be eliminated for every one approved? 

The same week that the EO was announced, OIRA sought to clarify it, in the process significantly restricting its scope.  First, OIRA noted that the EO would cover only “significant regulatory actions” as defined in Executive Order 12866 (issued by President Clinton).  This is an enormous change to the scope of the initial order, which purported to cover all regulations, including guidance documents.  Now the order will be read to cover primarily rulemakings which “have an annual effect on the economy of $100 million or more.”  Guidance documents with this magnitude of effect will be evaluated only on a case-by-case basis.  In short, OIRA first severely restricted what counts as a “regulation” for purposes of the EO.

Second, OIRA went on to exempt from review even things that otherwise would count as “regulations” under this specific definition.  Regulations that are issued by independent agencies, or that implement federal spending programs (like Medicare), or that are facing imminent statutory or judicial deadlines (in the sense that these regulations were ordered by other branches of government) would not be subject to the EO.

Third, OIRA explained that agencies do not have to actually eliminate two regulations before promulgating a new one.  They must only “identify” such regulations for repeal (as accurately stated in the EO, although not in Trump’s public comments).  The agency must identify those regulations for repeal by the time the new significant regulatory action is issued, but they need not repeal those regulations by that date, only set forth a timeline for their repeal.

No less an authority than Professor Cass Sunstein, head of OIRA under President Obama, praised the guidance interpreting the EO as “highly professional,” since it enables the policy to be carried out in a way that is “sober” and “knowledgeable,” rather than in a way that would “create chaos in government and violate the law.”  

I agree with Professor Sunstein, except that I question whether in the face of such dramatic changes to the order, it makes sense to continue articulating it as “for every one new regulation, two old regulations must be eliminated.”  The Trump administration may get a lot of mileage and good press out of that statement, but it’s just not true—except under novel (and highly counterintuitive) definitions of “every,” “regulation,” and “eliminated.” 

At this point, it’s largely a publicity stunt. 


The Procedure Fetish

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If adding new administrative procedures will so obviously advance a libertarian agenda, might not relaxing existing administrative constraints advance progressive goals?

Nick Bagley

University of Michigan Law School

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Congress must take steps to ensure that any 2020 transition is an improvement over Trump's transition in 2016

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Columbia Law School

The United States Owes Tens of Billions, Says the Court of Federal Claims (Part 2).

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Should insurers gets every penny of cost-sharing payments that they're owed under the Affordable Care Act? Or have they mitigated their damages?

Nick Bagley

University of Michigan Law School