Regulation Renovation: The Executive Order To Make Deregulation Permanent
The White House Office of Management and Budget’s new Streamlining the Review of Regulatory Actions memorandum signals a preferential stance toward deregulation, urging agencies to quantify and document deregulatory gains just as rigorously as they do rule costs.
It’s an important enough shift to need amplification, clarification and extension in a new Trump Executive Order—one that overhauls how White House regulatory review is conducted and, ideally, precludes most new regulation altogether.
The current tentpole, the Clinton-era Executive Order 12866 (“Regulatory Planning and Review”) replaced the Reagan convention that benefits of regulation should “outweigh” costs with the weaker stipulation that benefits merely “justify” new burdens.
Granted, Trump has already issued 212 executive orders along with numerous proclamations and memoranda, many targeting regulation in general or in specific sectors. Yet Congress has not codified any of Trump’s regulatory streamlining efforts.
The new Streamlining directive accelerates agency and OMB review timetables to address the “ossification” of the rulemaking process—something acknowledged by both left and right. More entrepreneurially, it lays out an agenda for operationalizing the Administrative Procedure Act’s “good cause” exemption to eliminate certain “facially unlawful” rules without public comment based on recent Supreme Court jurisprudence. That’s a novel use in need of judicial testing (detailed here).
But the memo’s closing section on Developing Better Deregulatory Records articulates a semi-philosophical shift toward making deregulation a permanent operational mode. It’s skeletal, and will be ditched at the first opportunity if the White House changes hands, but it could carry far greater weight if fleshed out in a new executive order rewriting E.O. 12866. Ideally, Congress would codify the approach, not just for streamlining existing rules but for preemptive contemplation before any new rulemaking.
Bringing Agencies to Heel
Agencies have rarely met a regulation they disliked, and their incentives align with expanding “net benefits” largely without limit. Criticism of the new directive captures that protective stance. The Streamlining memorandum is “propaganda” according to Public Citizen, that “rests on the irrational proposition that all deregulation is good for America,” claiming it tells agencies to do the administration’s bidding by repealing “safeguards regardless of their benefits to consumers, workers, the economy and the environment.”
Benefits of Deregulation As A Policy Anchor
What the Streamlining memo reintroduces—with a vigor perhaps not seen since the long-forgotten Bush 1.0 Regulatory Program of the U.S. Government—is recognition of the benefits of deregulation in increasing “the scope of private freedom.”
Appealing to agencies to make OMB “your partner in the deregulation agenda,” the memo correctly observes that “deregulation will leave more individuals and firms free to pursue their own self-defined interests, unfettered.” So too will avoiding unnecessary regulation in the first place.
“Quantifying” The Benefits Of Deregulation
Deregulation itself produces real and sometimes “measurable” public benefits—freedom, innovation and prosperity—that deserve analytical weight and credit. The memorandum urges agencies to quantify and document these gains as rigorously as they assess regulatory costs. “Indeed, meaningful compliance with Section 3 of EO 14192 [Unleashing Prosperity Through Deregulation] necessitates agencies engaging in cost-benefit quantification, as that EO requires a quantitative netting of regulatory vs. deregulatory rules.”
Some of this over-reliance on quantification can backfire, however. The reality is that the vast sweep of regulatory costs remains unfathomed and unmeasured, and rules are often justified on qualitative or arbitrary grounds—terrain where pro-regulatory forces excel and Team Deregulation struggles.
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