On February 24, 2017, President Donald Trump signed an Executive Order entitled “Enforcing the Regulatory Reform Agenda.” Rather than actually implementing regulatory changes, however, the Executive Order directs federal agencies to establish a task force to evaluate existing regulations and prepare recommendations to the agency head for possible repeal, replacement, or modification. In this regard, the most recent Executive Order was similar to an earlier Executive Order signed on January 30, 2017, which required executive departments or agencies to “identify at least two existing regulations to be repealed” for every new regulation proposed.
While statements of aspirational policy are one thing, the actual modification of regulations can be another. This article examines three tools available to the incoming Administration for implementing regulatory reform: (1) executive orders, (2) repeal or replacement of administrative rules; and (3) litigation strategies and enforcement mechanisms.
Executive orders issued pursuant to authority granted by the Constitution or a Congressional delegation of authority have the full force of law.1 However, executive orders lack the permanence of administrative rules formally adopted by regulatory agencies and an incoming president can rescind prior executive orders without the need to follow any procedural or legal requirements. As a result, the easiest and quickest way for the Trump Administration to reverse policy positions is to either rescind or replace executive orders previously adopted by President Obama. Alternatively, the new administration could place a moratoria on the implementation of final rules scheduled to take effect during the last days of the outgoing administration, an approach that was employed by President Reagan, President Clinton, President George W. Bush and President Obama.
Rescinding or Replacing Final Agency Rules
Unlike executive orders, regulations adopted pursuant to the Administrative Procedure Act’s “notice-and-comment” rulemaking process are much more durable. Once final rules have been published in the Federal Register, the only way that they can be replaced or rescinded is through initiation of a new rulemaking process that includes public notice, solicitation of public comments, and preparing responses to those comments or accommodating them in the final rule. What this means is that, if a President had issued an executive order directing an agency or department to adopt a regulation under a statutory mandate, rescinding the executive order would not rescind the regulation.
While administrative agencies are free to change positions, they must “provide a reasoned explanation for the change;”2 they may not “simply disregard rules that are still on the books.”3 And when changes are made to final administrative rules, an agency must “show that there are good reasons for the new policy” or risk having the changed rules rejected by courts as arbitrary and capricious.
Ordinarily, the rationale for administrative policies is developed through the notice-and-comment rulemaking process, with public notice of proposed rules in the Federal Register, allowing interested persons an opportunity to comment on the proposed rule, and, after considering those comments, publishing the final rule, along with a general statement of its basis and purpose. The rulemaking process can be shortened when an agency finds that, for “good cause,” the procedures are “impracticable, unnecessary, or contrary to the public interest.”4 However, when agencies use the good cause exception, they must publish their intent to do in the Federal Register and provide a rational for the use of the exception.5 Invocation of the good cause exception is subject to judicial review and the notice-and-comment rulemaking process can be avoided only in emergency situations.
Depending on the scope and significance of the regulation, the notice-and-comment rulemaking process requires months and sometimes years to complete. For example, the rule defining “waters of the United States,” one of the Trump Administration’s prime targets for revision, took 14 months to go from a draft rule to the final rule after consideration of more than one million public comments. Through yet another Executive Order, signed on February 28, 2017, the President Trump has directed the EPA and the Corps to recommence this process and evaluate the rule finalized in June 2015 and “publish for notice and comment a proposed rule rescinding or revising the rule, as appropriate and consistent with law.” Development of the Clean Power Plan, which is also on the top of the list of regulations to be immediately repealed by incoming Administration, took more than two years and generated more than four million public comments.
Rescinding rules that have begun to be implemented can be difficult to the extent the affected industry has made substantial investments to come into compliance. In such circumstances, industry itself may resist change because it would entail additional expense and uncertainty from the rescission.
Revised Enforcement and Litigation Strategies
A third method of modifying regulatory policy is through changing the way regulations are enforced or terminating defense of regulations currently in litigation. A number of the Obama Administration’s most prominent regulatory measures are in litigation, including both the Clean Power Plan and the Waters of the United States rule, making it unclear how implementation of any Executive Orders regarding those rules may be implemented.6 In cases where no decision has been issued, the incoming Administration could request a voluntary remand of the case back to the applicable agency before any decision was issued, allowing the agency to revise or rescind the rule pursuant to notice-and-comment rulemaking. Alternatively, the Trump Administration could choose not to appeal an adverse court decision or cease defending existing appeals of the regulation. However, in the case of high-profile environmental regulations such as the Clean Power Plan or the Waters of the United States rule, all of the States and environmental intervenors could still press the appeal.
While accusations of selective enforcement often get political traction, they have been less successful with the judiciary, where judicial review of an administrative agency’s decision not to act is frequently viewed as usurping agency discretion regarding its use of resources and decisions on enforcement.7
While President Trump can immediately rescind or replace executive orders issued by President Obama, revising administrative regulations adopted through notice-and-comment rulemaking will require initiation of a new rule making process that includes public notice, solicitation and response to comments and judicial review of the modified rules. Some of the prime targets of President Trump’s promised regulatory reform, such as EPA’s Clean Power Plan and the rule defining the Waters of the United States, will likely take years to revise and additional years to litigate. As a result, President Trump’s promise to reform the entire regulatory code will take many months to achieve, if it can ultimately be accomplished at all.