Regulatory Developments

Does Trump’s Executive Order on Regulations Have Legal Legs?

Even nonlawyers have spotted the arbitrary nature of President Trump’s January 30, 2017, Executive Order (EO), Reducing Regulation and Controlling Regulatory Costs. Among other things, the EO directs that each executive agency identify 2 regulations to be repealed for each significant regulation it proposes in 2017. Why 2? Why not 1 or 5 or 10? This question is not answered in either the EO or the interim implementation guidance for the EO the White House Office of Management and Budget (OMB) released several days later. Neither do the 2 documents provide any statutory foundation for the two-for-one trade-off.

It is the absence of a clear legal framework for the EO and OMB guidance that prompted environmental, public advocacy, and worker organizations to quickly put together a 50-page legal petition to the U.S. District Court for the D.C. District, asking that the court find the EO and guidance illegal and block their implementation.

Money Saved Doesn’t Qualify

The EO also informs agencies that the total cost of all regulations issued this year may not be greater than zero unless otherwise required by law and that the cost of any new regulation be offset by the elimination of existing costs associated with at least 2 prior regulations.

OMB’s guidance answers questions prompted by the EO. For example, money saved through the implementation of regulations—such as reduced consumer cost resulting from higher energy-efficiency equipment required by the Department of Energywould not qualify as a cost offset. Also, says the OMB, agencies that cannot identify the required savings from their own regulatory programs may apply to the OMB to have savings transferred from another Agency.

Congress Dictates Cost Considerations

The primary argument made by the petitioners—Public Citizen, the Natural Resources Defense Council, and Communications Workers of America—is that neither the Constitution nor federal statutes allow federal agencies to condition issuance of new regulations on repealing existing regulations to offset the costs of the new ones.

“The Executive Order exceeds the President’s authority under the Constitution, usurps Congress’s Article I legislative authority, and violates the President’s obligation to ‘take Care that the Laws be faithfully executed’ (Article II),’” state the petitioners.

The petitioners assert that in promulgating a new rule (including a rule repealing an existing rule), each agency must comply with the substantive and procedural requirements of the Administrative Procedures Act and the agency’s governing statute. In a rulemaking, an agency may make decisions based on costs only to the extent and in the manner Congress has set forth in the statute delegating rulemaking authority to the agency.

“By instructing the agencies to consider factors and take deregulatory action for reasons beyond those authorized by the agencies’ governing statutes, the Executive Order exceeds presidential authority and usurps Congress’s legislative authority,” state the petitioners. “And by directing agencies to violate the law or rendering them unable to regulate as required by the law, the President, through the Executive Order, is violating his obligation to take care that the law shall be faithfully executed.”

13 Agencies Named

In addition to President Trump and the OMB, the petitioners’ suit is directed at the heads of 13 federal agencies, wherein they say implementation of the EO would constitute unlawful activity. The complaint says the EO adversely affects the ability of each of those agencies to issue significant regulations intended to benefit plaintiffs and their members. The complaint lists examples of how each agency will be hobbled by the EO in meeting its statutory authority. For example, two potentially affected rules the EPA proposed under the Toxic Substances Control Act (TSCA) in December 2016 and January 2017 would phase out the use of trichloroethylene (TCE) in vapor degreasing, aerosol degreasing, and spot cleaning in dry-cleaning facilities. The EPA estimated that the vapor degreasing rule will impose costs of $30 million to $45 million annually but have net benefits (including health protection benefits) of $35 million to $402 million annually.

“To promulgate the regulations, the EPA must repeal at least twice as many existing regulations to offset costs of the new standards, without regard to the net benefits of the new regulations and the repealed regulations,” state the petitioners. “The Executive Order requires the EPA to make decisions based on an impermissible and arbitrary choice—whether to issue a new standard at the cost of the loss of benefits of two existing standards. To repeal two toxic substance safety standards for the purpose of adopting one would be arbitrary, capricious, an abuse of discretion, and contrary to the TSCA.”

Changing Government’s Role

“If implemented, the order would result in lasting damage to our government’s ability to save lives, protect our environment, police Wall Street, keep consumers safe, and fight discrimination,” said Public Citizen President Robert Weissman. “By irrationally directing agencies to consider costs but not benefits of new rules, it would fundamentally change our government’s role from one of protecting the public to protecting corporate profits.”

The complaint and petition for relief are at here.