On January 30, 2017, President Trump signed an executive order requiring government agencies to repeal two regulations for each new one issued, prompting concerns about the unintended consequences such as increasing an already lengthy rulemaking process and creating a new wave of litigation at the state level if they are no longer federally preempted.
Currently, federal agencies already go through a lengthy rulemaking process for both new regulations and those to be repealed, including an extensive public comment period. The executive order could burden regulators as they now need to submit their suggested two-rule cuts for review in order to enact new legislation. Additionally, executive agencies will have zero budget for new rules this fiscal year. Industry groups waiting for regulations are looking at long and frustrating wait times.
Further, if an agency is hampered from issuing expected rulemakings, the freeze could create an increase in litigation. For example, a number of courts have stayed cases over “natural” label claims on food products after the FDA stated it may undertake a rulemaking to define the term. Plaintiffs lawyers could argue that these new regulations will not happen and request their cases to proceed. The effects of the executive order may not be felt immediately. However, industries that are heavily regulated, such as by the FDA, should expect a lengthier rulemaking process and the possibility of a rise in state actions.