The White House clarified that Trump’s January 30 “two for one” Executive Order doesn’t apply to the SEC and other independent regulatory agencies, Reuters reported.

Despite press coverage, the Order doesn’t actually require the elimination of two regulations for every new one issued. Instead, it requires executive-branch agencies to “identify at least two existing regulations” for every new one issued and then eliminate existing regulatory costs at the 2:1 ratio. So that places the emphasis on cost-efficiency more than mere number.

The Order also directs OMB to establish an overall annual regulatory cost budget (in addition to government spending) as part of the Presidential budget process.

In fact, insufficient economic-impact analysis has been an Achilles-heel for regulations in recent court challenges. See American Petroleum Institute v. SEC, 953 F.Supp.2d 5 (D.D.C. 2013) (resource extraction); Business Roundtable v. SEC, 647 F.3d 1144 (D.C. Cir. 2011) (proxy access); American Equity Investment Life Insurance Co. v. SEC, 613 F.3d 166 (D.C. Cir. 2010) (equity indexed annuities); Chamber of Commerce v. SEC, 443 F.3d 890 (D.C. Cir. 2006) (mutual fund directors); Chamber of Commerce v. SEC, 412 F.3d 133 (D.C. Cir. 2005) (same).

The Order also is subject to important exceptions, including:

  • It applies only to executive-branch agencies and not independent regulatory agencies.
  • It does not apply to regulations required by statute, due to “unless required by law” or “prohibited by law” exceptions throughout Section 2.
  • The entire process, including cost elimination, is subject to the APA.
  • It excludes military, national security or foreign affairs regulations.
  • It excludes internal agency management regulations.
  • It allows the director of OMB to issue additional exclusions.

Indeed, the “required by law” exception appears so wide as to exclude all of the regulatory mandates imposed by Dodd-Frank, notwithstanding Trump’s wide criticism of the law.

The Executive Order is here: