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Downsizing Regulation

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President Trump last week promised to cut regulations to below 1960 levels. Standing next to stacks of regulatory code—one 20,000 pages high representing 1960, and the other 185,000 pages high from 2017—he touted his administration’s deregulatory achievements, claiming “the never-ending growth of red tape in America has come to a sudden, screeching and beautiful halt.”

Looking beyond the hyperbole we’ve come to expect from the president (anyone who follows regulation knows that cutting the regulatory code back to 1960 levels is unrealistic), what has the administration achieved on the regulatory front in 2017? A review of the key events over the last tumultuous 11 months reveals some real changes.

Early actions signaled a dramatic shift in regulatory practice

Within his first two weeks in office, President Trump issued Executive Order 13771 directing federal agencies to remove two regulations for every new one they issued, and to cap the total cost of new regulations at zero. In February, he issued a second executive order establishing in each agency a “regulatory reform officer” responsible for overseeing implementation of regulatory reform initiatives and policies, and a task force to make reform recommendations.

These signaled a dramatic shift in regulatory practice, motivating agencies to focus more attention and resources on evaluating existing regulations, and less on initiating new regulatory actions. Last week he announced the initial results of those orders, and taken at face value, they are striking.

Twenty-two deregulatory actions for every new regulatory action

An Office of Management and Budget report released last Thursday finds that during the first eight months of the administration (through September 30th), executive agencies issued 67 deregulatory actions and only 3 significant regulatory actions. The president said, “we aimed for 2-for-1 and in 2017, we hit 22-for-1.” As impressive as that ratio sounds, these results must be taken with a grain of salt, because the report counts any deregulatory action as an “out” but only significant regulatory actions as “ins.” Nevertheless, by changing reporting frequency, removing obsolete rules, and especially working with Congress to disapprove some of President Obama’s last-minute regulations, the administration appears to be taking the president’s orders seriously.

More meaningful is the report’s estimate that these actions will save Americans more than $570 million per year on net. Most of these savings ($417 million) come from repeal of a Federal Acquisition Regulation (FAR) on “Fair Pay and Safe Workplaces.” The swift repeal of this rule was possible both because President Trump rescinded President Obama’s Executive Order 13673, which had authorized it, and because Congress issued a joint resolution disapproving it under the Congressional Review Act (CRA). Which brings us to another important series of events in 2017.

Congress and the president disapproved a record number of rules

This was the year of the Congressional Review Act. Working with the Republican Congress, President Trump has disapproved 15 regulations, most issued at the end of the Obama administration. Regulations disapproved this way are immediately stricken from the regulatory code and agencies may not issue anything similar without express congressional authorization. Not all those resulted in significant savings, but the administration estimates that in addition to $417 million saved from the FAR disapproval, nullification of the Interior Department’s “Stream Protection Rule” saved Americans $80.5 million per year.

Regulations are proceeding at the slowest pace in decades

The pace of new regulation has visibly slowed in the Trump administration. A search of OMB’s database reveals that, between January 21 and December 20, 2017, the Office of Information and Regulatory Affairs concluded review of 21 “economically significant” regulations—those with impacts (costs or benefits) expected to be $100 million or more in a year. As the chart below shows, that is dramatically fewer rules than previous presidents have issued in their first years. This same database shows that Presidents G.H.W. Bush, Clinton, and G.W. Bush each issued 39 or 40 in their first years. President Obama issued 52 and even Reagan (considered the last deregulatory president) issued 36 economically significant final rules during his first year in office.

Number of Economically Significant Regulations Completed by Presidential Year

The George Washington University Regulatory Studies Center

For the first time, pursuant to E.O. 13771, OMB has asked agencies to designate their rules as regulatory or deregulatory. This allows a further breakdown of those 21 economically significant actions this year:

  1. Three are classified as “regulatory,” including two from HHS and one from the IRS.
  2. Four are “deregulatory,” including three HHS rules as well as the congressionally-disapproved FAR rule mentioned earlier.
  3. Six are “exempt” from E.O. 13771. These include “transfer” rules, such as government payments and fees, and annual migratory bird hunting limits.
  4. EPA’s renewable fuels standards are classified as “other,” though some (including me) would call them regulatory.
  5. Four of the 21 rules are not designated; two are delays, one addresses Affordable Care Act market stabilization, and one Department of Education grants.

Big regulations being reconsidered

In a recent article, my colleagues Zhoudan Xie and Sofie Miller identified ten important regulatory and deregulatory themes that garnered attention and changed the regulatory landscape in 2017. In addition to the president’s executive orders and congressional resolutions disapproving regulations, they highlight the administration’s review of several major regulations issued in the Obama administration, including the Environmental Protection Agency’s definition of Waters of the United States (WOTUS) and Clean Power Plan, and the joint EPA and Department of Transportation greenhouse gas CAFE rule. These actions could have large impacts on all Americans.

Cut regulation to 1960 levels?

In his speech on December 14, President Trump cut a piece of red tape stretching between the stacks of paper representing the size of the regulatory code in 1960 and 2017, saying “we’re getting back below the 1960 level, and we’ll be back there fairly quickly.” This is a pipe dream. In 1960, Congress had not passed much of the legislation that has led to the dramatic increase in the modern regulatory state. There was no EPA, no Department of Energy, no Occupational Safety and Health Administration, no Department of Homeland Security, no Consumer Product Safety Commission and no Consumer Financial Protection Bureau. As his OIRA administrator has acknowledged, it is simply not within the president’s power to reduce regulation to 1960 levels.

Yet, the president’s claim that “for the first time in decades, we achieved regulatory savings" appears to have some merit. Whether the administration can continue on this path, and what effect these efforts will have on Americans, remains to be seen.

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