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Warning Signs: Will Federal Agencies Derail Trump's 2-for 1 Deregulatory Agenda?

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In mid-December, the Trump administration touted success exceeding its one-in, two-out regulatory goals for managing on-the-books regulations, achieving instead a one-in, 22-out ratio. These goals had been set out in his Executive Order 13,771.

Three regulations were added, but 67 removed.

Getting rid of existing rules is tougher than stopping what’s in the pipeline, however. Of pending Obama-era rules, 1,579 were withdrawn or delayed during this first year of the Trump administration, according to the Fall 2017 Regulatory Plan and the Unified Agenda of Regulatory and Deregulatory Actions. This occurred apart from the 2-for-1 campaign.

The 67 removed are a helpful start; so too is the planned savings of $10 billion from assorted rule reductions and modifications expected in 2018.

But when one digs a little deeper, and looks beyond the immediate horizon, agencies appear to be planning a lot more regulating than deregulating.

The place to look is the database in the aforementioned Unified Agenda. It’swhere (with caveats we’ll get to) where agencies list and describe their regulatory priorities.

There are three main rule categories in the Agenda: “Active,” “Completed,” and “Long-term.”

Completed Regulatory Actions Meet 2-for-1 Goals

The “Completed” component under "EO 13771 Designation" comprises those recently highlighted as successes in the Trump administration’s "Two-for-One Status Report and Regulatory Cost Caps."

Where the administration indicated 67 “Completed” deregulatory actions, the Agenda identifies 62 (see center portion of the chart below). Part of the reason for that discrepancy is likely that nine of Trump’s cuts involved agency sub-regulatory guidance documents or notices rather than formal rules, some of which do not appear in the Agenda.

The administration pointed to three completed regulatory actions offset by the just-noted cuts. Actually, 15 completed actions appeared in the Fall Agenda, with six among them deemed “economically significant.” (See chart below.)

It's not fully clear why the administration reported only three completed regulatory actions. However for purposes of Trump’s executive order, only “significant” regulations are counted, so the presence of 15 completed regulatory actions under the database’s "EO 13771 Designation" is not a misfire. Even with six economically significant actions rather than three completed, the two-for-one goal is easily met given 62 deregulatory actions, as long as costs are net-zero. It’s OK to list some "non-significant" rules for credit toward the 2-for-1 goal. (And they may be more significant than claimed, in the long run.)

Source: Compiled by author from the Fall 2017 Regulatory Plan and the Unified Agenda of Regulatory and Deregulatory Actions

Here's how Trump's 1-in, 2-out regulatory program is going.

Active Regulatory Actions

Active actions are those in the pipeline at the “pre-rule,” “proposed” and “final” rule stages. They are the ones in play, but not yet finalized. Without breaking them down by category here, one can see in the chart above that a total of 448 deregulatory actions in play comfortably exceeds 131 regulatory ones.

More importantly, the 25 economically significant and 126 “other significant” deregulatory actions outweigh the regulatory actions in these categories.

However, deregulatory actions in these costlier sub-categories do not exceed regulatory ones by a 2 for one margin. Since “significance” implies costs, that could be, but need not necessarily be, a red flag for prospects for success. It’s something to keep an eye on.

Otherwise, of the 448 deregulatory "Active" actions, 272 are “substantive, nonsignificant”; 9 “routine, frequent”; and 16 info/admin other.”

Unfortunately, Long-term Planned Regulatory Actions Outstrip Deregulatory Actions

At least in terms of what’s disclosed in the Agenda, and we must say the publication isn’t necessarily definitive, longer term deregulations show less promise.

It may be a residual, #resistant phenomenon on the part of agencies that 102 "Long-term" actions are deemed "regulatory"—but only 30 are deemed "deregulatory".

Even more worrisome is that, of the anticipated "Long-term" rules disclosed, 25 are of the economically significant category, while none in this category are deregulatory.  Tomorrow’s cost savings need to come from a long-term liberalization mindset, but as far as we can tell, agencies intend to add more costly rules than they intend to cut.

Even in the “other significant” category, 63 are regulatory, but only 16 deregulatory.

Without changes, 2-for-1 is being inverted with respect to longer term regulations. As newer Agendas appear in 2018 and 2019, these rules become less “long term” and the situation may be rectified. Here we just draw attention to an apparent deterioration in deregulatory vigor.

Trump is so far having to act alone without Congress. Getting rid of regulations requires going through the public notice-and-comment process. It takes time, and the Administrative State works to the advantage of agencies that want to maintain vast regulatory edifices. Over time, Republicans who opposed agencies end up running them in Republican administrations.

The administration itself notes an important qualifier defining "EO 13771 Regulatory Actions” when it comes to deregulatory expectations:

EO 13771 regulatory actions are defined as those final actions that both impose costs greater than zero and qualify as “significant” under Section 3(f) of EO 12866 (see M-17-21, Q2). Accordingly, the regulatory actions listed in this table represent a subset of an agency's total regulatory actions.

In addition to that limitation, agencies not actually required by law to issue only the rules they describe in the Agenda or Plan.

Furthermore, independent agencies are not subject to Trump’s 2-for-1 executive order, which matters a lot since these agencies may impose the costliest rules. On the plus side, however, and not counted in Trump’s 2-for-1 success, is the Federal Communications Commission’s rollback of Obama-era net neutrality rules.

Agencies have complied with the 2-for-1 goals of the Trump administration thus far. Ensuring that they continue to do so will require vigilance since agencies’ own indicators show zeal deteriorates with time, and thus far an eventual bias toward adding rather than subtracting rules.

Another concern is that agencies may react to scrutiny by substituting guidance documents for formal regulations. But this is a phenomenon that the administration has recognized in various contexts, including some of the reductions this year. However, a more aggressive executive order on guidance usage is warranted in the absence of congressional action on regulatory reform.

Originally published to Forbes.