President Trump’s Two for One Deal

In his first week in office, President Trump issued executive orders freezing all pending federal regulations and halting executive agency hiring. To begin week two, the President issued an executive order requiring federal agencies to identify at least two existing regulations for repeal for every new regulation issued.

The executive order, entitled Reducing Regulation and Controlling Regulatory Costs, is intended to promote “the prudent and financially responsible expenditure of funds, from both public and private sources.” By reducing the number of federal regulations, the President seeks to save both public funds (agency implementation costs) and private funds (industry compliance costs). In addition to directing the repeal of two existing regulations for every new regulation, the order tasks agency heads with achieving a total incremental cost of “zero” for all new regulations issued in fiscal year 2017. According to the order, incremental costs associated with any new regulations, to the extent permitted by law, must be offset by the elimination of existing costs associated with at least two existing regulations.

Not surprisingly, the order was quickly challenged in court. On February 8, 2017, the Natural Resources Defense Council (“NRDC”) and others filed a complaint against the President in the U.S. District Court for the District of Columbia. The complaint seeks a declaratory ruling that the order is an infringement on legislative authority in excess of the President’s powers under the Constitution. Among other things, the complaint alleges that the order will block or force the repeal of regulations necessary to protect health, safety, and the environment.  

Specifically, the complaint emphasizes how the order’s two-for-one and incremental cost mandates “focus on costs while ignoring benefits.” The complaint discusses a number of regulations that may be affected by the order, including under the Occupational Safety and Health Act, Toxic Substances Control Act, Hazardous Materials Transportation Act, Clean Water Act, Endangered Species Act, and Clean Air Act. NRDC alleges that the order is arbitrary, capricious, an abuse of discretion, and not in accordance with law, because (1) there is no statute authorizing agencies to withhold a needed regulation based solely on the increase in cost the regulation may cause; (2) agencies may not be forced to repeal regulations already determined to be appropriate through the rulemaking process; and (3) there is no statute authorizing agencies to base regulatory decision-making on a goal of zero net cost increase.

While the NRDC lawsuit is only one of several challenging President Trump’s recent flurry of executive orders, the outcome will have a significant impact on the regulated community. We’ll keep you apprised of developments. 

Reducing Regulation and Controlling Regulatory Costs, Executive Order, January 30, 2017
Public Citizen Inc. et al. v. Donald Trump et al., No. 1:17-cv-00253 (D.D.C).