Regulatory Reset: How easy is it to undo regulation?

Susan E. Dudley
by Susan E. Dudley, Director
November 30, 2016

President-elect Trump has promised big cuts in regulation, including through a requirement that for “for every one new regulation, two old regulations must be eliminated.” How easy would this be to accomplish? It depends on the circumstances.

While regulations cannot be repealed with the stroke of pen (unlike executive orders, which presidents can unilaterally issue and unilaterally revoke), there are procedures for modifying or removing them.

Midnight hour regulations

The most recent Unified Agenda of Regulatory and Deregulatory Actions, published before Thanksgiving, identifies dozens of regulations on track to be issued before the clock strikes twelve on the Obama administration. These will all be subject to review under the Congressional Review Act (see below), but some of them may not cross the finish line by Inauguration Day, especially since the Federal Register, where all new regulations must be published, can get backed up during crunch times.

Regulations that haven’t been published by January 20, 2017 will likely be pulled back immediately. If history is any guide, one of the first actions Chief of Staff Reince Priebus will likely take after the new President is sworn in will be a memo to all agencies directing them not to send regulations to the Federal Register until they are approved by incoming policy officials, and to retrieve from the Federal Register all regulations not yet published.

The President could work with Congress

President Trump will face a Republican majority in Congress. While Congress can always write legislation that reverses or modifies an agency’s regulation, passing new legislation is a cumbersome process. For any regulation issued in the last seven to eight months of President Obama’s term, however, simple majorities in both houses of Congress can use expedited procedures to send a joint resolution of disapproval to the President.

Pursuant to the Congressional Review Act of 1996 (CRA), Congress has 60 legislative days after a regulation is published to vote to disapprove it. If a resolution of disapproval were to fall on President Obama’s desk, he would veto it (in fact, he has vetoed five over the last few years).  However, if it were to land on President Trump’s desk, he could sign it, and overturn the rule. 

The timing of a rule’s publication is thus important. Adjusting for weekends, holidays, time spent in home districts etc., experts who have looked at the legislative calendar for the remainder of the 114th Congress estimate that the 60-day window began in late May. The CRA stipulates that for rules issued with less than 60 days left in a session, the review clock begins again with a new Congress, which has another 60 session days for review. This means that any rules issued between late May and January 20 will be subject to disapproval by the new Congress and next president. As a result of the CRA, President Trump could work with Congress to overturn recent regulations without going through the long and litigious notice and comment process.

The President’s response to litigation will affect regulatory outcomes

How the Justice Department defends the outgoing administration’s regulations against lawsuits will affect their ultimate outcomes. This may be especially relevant since President Obama’s agencies have pushed the limits of executive power with controversial rules related to the environment, health care, financial markets, the workplace, and more. In response to legal challenges, several recent court decisions appear sympathetic to the argument that they went beyond the powers assigned to the executive branch by the Constitution and delegated to it by Congress.

Just last week, for example, a Federal judge in Texas issued an injunction temporarily blocking implementation of the Department of Labor’s expansive overtime regulation which would have shifted salaried employees making less than $47,500 to hourly positions that receive mandatory overtime pay. The judge found merit in the argument brought by 21 state attorneys general and small business groups that the Department of Labor had overstepped its statutory authority. (Interestingly, the House is considering adjourning early in order to leave open the option of using the CRA to disapprove this rule, which was published on May 23, 2016. Without the injunction, the rule would have gone into effect on December 1, 2016.)

A role for the states

Last February, the Supreme Court took the unusual step of staying EPA’s Clean Power Plan while cases brought by more than two dozen states and utilities continue to make their way through the lower courts. In October, the U.S. Court of Appeals for the Sixth Circuit issued a nationwide stay on EPA and the Army Corps of Engineers’ “Waters of the United States” rule that defines which water bodies fall under federal, as opposed to state, jurisdiction.

One of the grounds for challenging both of these rules is their far reaching exercise of control over matters that under the Constitution have been considered the purview of the states. As a result, the states may play an important role in how these are resolved in a Trump administration, especially given the Republican platform proposal to “shift responsibility for environmental regulation from the federal bureaucracy to the states.”

President Obama’s Clean Power Plan already exempted Alaska and Hawaii from its coverage.  Perhaps the new administration would signal to other states that it would entertain their requests for the same exemption.

Notice-and-comment rulemaking is always an option

To modify or overturn a regulation that does not fit any of the above circumstances, an agency would have to go through all the procedures required to issue a new regulation. These steps are governed by the Administrative Procedure Act of 1946 and include developing a legal record justifying the proposed change (including technical and economic analysis), and seeking public comment on that record and the proposed regulatory (deregulatory) action. The agency would have to respond to public comment, which may lead to modifications to the draft regulation, before it issues a final rule. These steps generally take at least a year, but the story won’t likely end there.

When the final rule is issued, two records will exist, one developed to support the original regulation and a second that supports its elimination or modification. The revised rule will almost certainly be litigated, with parties that supported the original rule pointing to the earlier record to defend their objections. This legal process may take years to resolve.