On January 30, 2017, President Trump issued an Executive Order to reduce the number of federal regulations and control regulatory costs (the “Order”).
The Order, which applies to any “executive department or agency”—
- forbids any such department or agency from issuing a new regulation unless it identifies two existing regulations to be rescinded, unless prohibited by law;
- forbids any such department or agency from issuing a new regulation unless the incremental costs of the new regulation are offset by eliminating existing costs associated with at least two existing regulations, to the extent permitted by law;
- requires that, in the fiscal year 2017, the total incremental cost of all new regulations, including repealed regulations, be no greater than zero, unless required by law or consistent with advice of the Director of the Office of Management and Budget (“OMB”);
- requires, beginning in the fiscal year 2018, each such department and agency to submit annual regulatory cost submissions to OMB;
- forbids any such department or agency from issuing a regulation unless the regulation was included on the most recent version of the department or agency’s Unified Regulatory Agenda, unless required by law;
- requires the Director of OMB to identify to agencies the total amount of incremental costs allowed for each agency in issuing new regulations each year; and
- requires the Director of OMB to provide guidance to the heads of such departments and agencies on how to implement the Order’s requirements.
It is not immediately clear whether the Order requires an agency to rescind two regulations at the same time that it promulgates a new regulation, or whether an agency can simply “identify” two regulations for later rescission. The Supreme Court has held that under the Administrative Procedure Act, an agency must go through a notice-and-comment rulemaking process to rescind a regulation. See Motor Veh. Mfrs. Ass’n v. State Farm Ins., 463 U.S. 29 (1983). See also FCC v. Fox Television Stations, Inc., 556 U.S. 502 (2009) (holding that an agency that seeks to rescind a regulation is required to explain why it is doing so, but is not required to demonstrate that its reasons for its new policy are better than the reasons for its old policy).
The Order defines the term “regulation” to include “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,” similar to the definition of “rule” under the Administrative Procedure Act. The Order excludes regulations issued with respect to military, national security, foreign affairs, or agency organization, management, or personnel matters, as well as any other category of regulations exempted by the Director of OMB.
The Order does not define the term “executive department or agency.” Many of the federal financial regulators are considered independent agencies, not executive departments or agencies. According to news reports, a White House spokesperson has confirmed that independent agencies are not subject to the Order.
However, as we discussed in a previous post regarding President Trump’s hiring freeze, in the absence of a definition, it is possible that the Trump administration could take the position that the Consumer Financial Protection Bureau is considered an “executive agency” as a result of the United States Court of Appeals for the District of Columbia Circuit’s October 2016 decision in the PHH Corporation v. Consumer Financial Protection Bureau case. In addition, some or all of the federal financial regulators may decide to comply with the Order voluntarily.