Testimony of Wayne Crews on “Regulatory Reform Task Force Check-In”

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When policymakers neglect federal regulation, they ignore arguably the greatest element of governmental influence in the United States’ economy and perhaps in society itself. As a policy concern, regulation merits attention like the $20 trillion national debt receives, since both spending and regulation profoundly redirect societal resources.

When the era of executive regulation began in the 1920s, few likely imagined the dense tangle of rules it would produce nor how they would envelop the economy and society. But over decades, the federal regulatory state has continued expanding, with rules accumulating year after year. Members of both major political parties have long recognized that federal regulatory burdens can operate as a hidden tax.[1] President Donald Trump has echoed that view.[2] In response, his administration issued a memorandum titled “Regulatory Freeze Pending Review” to executive branch agencies.[3] (That is a typical step taken by new presidents wishing to review their predecessor’s pending actions and to prioritize their own.[4]) The president also issued during his first 100 days a series of executive actions related to reforming the regulatory process, in particular Executive Order 13771 “Reducing Regulation and Controlling Regulatory Costs,”[5] and Executive Order 13777,  “Enforcing the Regulatory Reform Agenda.”[6] The first established the one-in, two-out expectation for certain economically significant rules where not in violation of law. It also directed that “total incremental cost of all new regulations, including repealed regulations, to be finalized this year shall be no greater than zero” for executive departments and agencies. The second executive order launched Regulatory Reform Officers and Regulatory Reform Task Forces at agencies to oversee provisions of E.O. 13771 and prior consistent orders.

Other significant and related executive actions have included a presidential memorandum on “Streamlining Permitting and Reducing Regulatory Burdens for Domestic Manufacturing,”[7] and Executive Order 13755, “Expediting Environmental Reviews and Approvals for High Priority Infrastructure Projects,”[8] and Executive Order 13772, “Core Principles for Regulating the United States Financial System.”[9] Importantly also, a September 7, 2017 memorandum[10] from new Office of Information and Regulatory Affairs (OIRA) administrator Neomi Rao directed agencies for the first time to propose an overall incremental regulatory cost allowance in the Fall 2017 edition of their “Unified Agenda” on regulations. Prior Agenda editions, since the 1980s, would label rules as “economically significant,” but never has there been such a “regulatory budget” incorporated within. Rao says, “OMB expects that each agency will propose a net reduction in incremental regulatory costs for FY 2018.”

In that context, this testimony looks at OIRA’s and Trump’s Regulatory Reform Task Forces’ recent improvements in regulatory oversight, and urges reinforcement by Congress and the administration. Concern over regulatory growth lies not solely with the prior administration’s “pen and phone” stance. Congressional Republicans have acknowledged neglecting their own role in regulatory oversight, as the June 2016 House Task Forces addressing Article I and delegation issues made abundantly clear.[11]

On the regulatory front, the first nine months of the Trump administration have brought the issuance of the above executive actions, as well as the enactment of Congressional Review Act resolutions eliminating 14 of former President’ Barack Obama’s rules (among hundreds eligible). Capping weeks of the Obama White House’s touting of a “pen and phone”  (Rucker 2014) strategy to further expand federal economic, environmental and social regulation and intervention (White House, 25 February 2014), Obama at that time vowed that, “[I]if Congress won’t act soon…, I will. I will direct my cabinet to come up with executive actions we can take, now and in the future (Marks 2013).”

While the 114^th Congress objected to such aspirations, it faced “the year of the veto (Sink and Wong 2015).” The president promised vetoes on regulatory reforms like the REINS Act and Regulatory Accountability Act (which now await Senate action in the 115^th Congress), and followed through on a veto of the Keystone XL pipeline (White House, 2 February 2015) in contrast to America’s onetime ethos of rapid, roiling infrastructure growth (Gordon 2004).

While the Constitution has not come to the rescue, we are not without options. In light of Congress’ over-delegation of power to federal agencies, this testimony surveys Trump’s actions thus far in light of the formal oversight procedures that ostensibly exist for the thousands of regulations issuing annually. Next we note that central oversight of regulation sports theoretical inconsistencies and gaps, and present data demonstrating that federal regulatory review is far from comprehensive. While central review’s shortcomings (it is weak compared to the administrative state as such) hasn’t worked to halt the advance of the vast administrative state, in recent months it has played a far greater role, and can go further still. Given that reality that code or administrative agency law is here to stay for the time being, this testimony offers proposals for the Task Forces and OIRA, while remaining cognizant of central review’s limitations. The aim of these proposals is to (1) help legitimize Congress’ case for regulatory liberalization and enable a revival of some semblance of constitutional order; and to (2) facilitate the executive branch’s deployment of the “pen and phone” in defense of liberty. An alternate take on “Energy in the Executive” (Federalist Papers No. 70, 1788) is a welcome contrast to its usage in undermining institutions of limited government and destabilizing core values of classical liberal society. 

Read the full testimony here.