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DEREGULATION IN AN EMERGENCY: The President’s Emergency Powers Include Not Just Imposing Regulations on Industry, but also Suspending Regulations

Across the country, governors have suspended harmful regulations on an emergency basis due to the COVID-19 crisis. The improvements that have resulted have got people asking if the regulations were ever really needed at all. If we are better off without these regulations, what others are also causing more problems than they solve? This raises the question of whether President Trump can make further improvements.

There are lots of bad regulations that harm the economy and have not been examined closely in decades. But regardless of the benefits that suspending these rules would bring, there is a fundamental question that must be asked first. Does this national emergency give President Trump the power to suspend these harmful regulations?

The strongest powers of the President in such an emergency come from the Defense Production Act of 1950 (DPA). Trump has recently invoked this law to compel General Motors to produce ventilators and 3M, General Electric, and Medtronic to produce additional N95 masks. While the DPA does allow government prioritization of goods critical to national defense, the DPA authority goes beyond that.

The DPA, which was created at the beginning of the Korean War, rests on the notion that parts of civilian domestic industry are critical in times of war or other national emergency to provide goods the government needs. It provides the authority for the president to protect and restore these capabilities for the reasons it describes in 50 U.S.C. § 4502(a)(7):

[M]uch of the industrial capacity that is relied upon by the United States Government for military production and other national defense purposes is deeply and directly influenced by the overall competitiveness of the industrial economy of the United States; and the ability of industries in the United States, in general, to produce internationally competitive products and operate profitably while maintaining adequate research and development to preserve competitiveness with respect to military and civilian production

For this reason, the DPA in a time of emergency like this gives the president the power to “create, maintain, protect, expand, or restore domestic industrial base capabilities essential for the national defense.” 50 U.S.C. § 4533(a). To do this, “the President may make provision for the development of production capabilities,” Id. at (c), and “the President may prescribe such regulations and issue such orders as the President may determine to be appropriate to carry out this chapter.” 50 U.S.C. § 4554(a). The regulations issued under the DPA are exempt from normal Administrative Procedure Act provisions (although they do require a notice and comment period for non-temporary regulations). 50 U.S.C. § 4559.

If the emergency weren’t so serious as to substantially threaten our economy, these powers would not be available. However, there is no doubt that our domestic industrial base has been harmed by the COVID-19 epidemic and the ensuing near-halt of substantial economic activity. As we recover from this epidemic, the president has the authority under the Defense Production Act to enact regulations for the restoration of the domestic industrial base. A key part of this should be considering which existing regulations are harming the restoration of our economy. The DPA provides the president with the power to end such regulations to help restore our economy. This includes, under the Supremacy Clause, state regulations that harm interstate commerce.

That said, the federal government doesn’t have unlimited power; it has only the powers that the Constitution gives to Congress and the president. While the Constitution gives the power to regulate interstate commerce to the federal government, local economic activity is out of the reach of the president and Congress. The president, under the DPA, has the power to stop state regulations that interfere with the provision of goods and services across state lines, but much local domestic economic activity is left entirely in the hands of the states.

In addition to the DPA, the federal government should consider using prosecutorial discretion to decline enforcement of statutes that do not make sense to enforce in the current crisis. An example is the EPA’s new policy of non-enforcement of civil regulations during the COVID-19 crisis in cases where private firms make every effort to comply but are unable to do so due to sickness or other coronavirus-related reasons. This enforcement discretion should be done on a case-by-case basis, but the government is not required to prosecute every case it can when doing so makes no sense.

President Trump has the authority to suspend rules across the country that are harmful to the economic recovery. He should consider doing so.