First 100 Days

Sound, Fury, and Fake Deregulation

The First 100 Days in Trump’s Administrative State

No one should be happy with how Trump has led the administrative state in his first 100 days. Trump’s aggressively deregulatory rhetoric has been combined with widespread ineffectiveness when it comes to actually directing agencies. In other realms, the mismatch between Trump’s words and behavior has sometimes been described as strategic. Even if so, when it comes to regulation, it is a bad strategy. The slippage between Trump’s words and actions amount to a kind of fake deregulation, leaving the public and the world with the mistaken belief that the U.S. regulatory state has been importantly weakened and that the U.S. is, for example, doing significantly less to combat climate change than it did in the past. Fake deregulation combines the ills of the status quo with the downsides of deregulation, as public and international confidence erodes unnecessarily, and business faces uncertain and fragmenting requirements. The result is not only bad for the public and nation, but also bad for the businesses that deregulation purports to help.

Throughout his candidacy and early Presidency, Trump’s claims about the administrative state have been bombastic and overtly deregulatory. He promised to cut regulations “by 75%, maybe more,” and his 100-day action plan promised to pursue “a requirement that for every new federal regulation, two existing regulations must be eliminated.” Adviser Steve Bannon went still further to announce that he wanted to “deconstruct the administrative state.” Trump has claimed that large numbers of agency jobs, including politically appointed leadership positions, are “unnecessary.” (“A lot of those jobs, I don’t want to appoint, because they’re unnecessary to have,” Trump has explained, asking—perhaps rhetorically—“What do all these people do? You don’t need all these jobs.”) He is also dismissive about climate change—arguably the largest regulatory issue of the modern era, which, in recent years, has been managed almost entirely through leadership by the president—suggesting that it is a hoax and/or naturally occurring and not even mentioning it in his first Earth Day address.

At first blush, Trump’s actions are likely to strike most people as deregulatory as his rhetoric. Consider these actions:

  • Trump followed up on his “one in, two out” plan by issuing Executive Order 13,771 on Reducing Regulation and Controlling Regulatory Costs, requiring agencies to identify “at least two existing regulations to be repealed” whenever they propose a new regulation. Perhaps concerned about the administrability of that order, he also issued a separate order on Enforcing the Regulatory Reform Agenda.
  • Of several thousand political appointments, Trump has made only a handful, leaving the vast majority of political appointments vacant, while some of the few positions that have been filled are held by people who have openly hostile pasts with the agencies they now lead. In fact, as of writing, of 554 key agency positions requiring Senate approval, only 24—or 4% —have been filled. Several thousand additional leadership positions remain vacant as well.
  • Trump has proposed a so-called “skinny budget” that would, if passed by Congress, cut many agencies’ spending to the lowest in decades.
  • Working with the Republican-controlled Congress, Trump has signed thirteen bills reversing Obama-era regulations, using the long-neglected Congressional Review Act.
  • While it remains unclear whether Trump will withdraw from the Paris Accords—the historic climate-change agreements struck last year—he did issue an order on Promoting Energy Independence and Economic Growth, rescinding almost all of President Obama’s executive climate actions and ordering the Environmental Protection Agency (“EPA”) to begin reconsidering the massive Clean Power Plan. Importantly, that order withdrew President Obama’s directions to agencies to use a centralized estimate of the “social cost of carbon” to estimate the likely impact of government action on climate change. On its face, this action alone may look revolutionary, as the social cost of carbon (sometimes called “the most important number you’ve never heard of”) had formed the centerpiece of modern U.S. climate-change policy.

Yet, most of these actions present a deregulatory façade. In reality, the regulatory state continues to function much the same as before, and while what changes that have occurred may indeed slow future-needed regulations, they will slow future deregulation at least as much, and possibly more.

Consider Trump’s executive orders, which mostly combine to either 1) do little that is administrable, or 2) entrench existing procedures. The two-for-one order is a case in point. Agencies are constrained by the statutes they administer, and are answerable to courts if they exceed their statutory authority, or if they act arbitrarily and capriciously (for example by considering factors that Congress did not mean them to consider). Because statutes do not generally allow agencies to ignore them in exchange for pursuing other statutory obligations, any agency citing this order as a justification to rescind a regulation would likely be reversed by a court. True, the order may deter agencies from issuing new discretionary regulations—but the greatest impact of that is simply to further entrench the status quo.

Other orders, including the order on Enforcing Regulatory Reform, are likely to have real impacts. But those impacts are also likely to enforce the status quo. Trump’s new Regulatory Reform Officers and Regulatory Reform Task Forces, created in the order, are unlikely to be able to actually implement the two-for-one order for reasons explained above. But, they may be quite effective at encouraging agencies to comply with existing procedures—including so-called “reform” initiatives, adopted by Trump, but which in fact stretch back to President Obama and beyond, including the Obama-era initiative to perform retrospective review and the Reagan-and-onwards innovation of relying on cost-benefit analysis as a way to evaluate regulations. These actions tend to further entrench the status quo—good news, insofar as the status quo operates effectively to save tens of thousands of lives a year and to promote the safety and welfare of millions. But, bad news insofar as they mislead about their impact.

In many ways, and perhaps surprisingly, it is also likely to be business as usual at agencies where Trump has neglected to appoint key political positions. Leaving these positions empty is, perhaps more than any other individual action, evidence of Trump’s unfamiliarity with the operation of the administrative state. Leaving agencies devoid of political leadership essentially eliminates any chance Trump has of effectively implementing deregulatory preferences because, with sparse political leadership, agencies continue to operate with dedicated career civil servants at the helm. Lacking new political direction as articulated by an appointee, most will simply continue with the status quo—the status quo set by the past administration. And this is without even considering the fact that career public servants, who routinely dedicate their lives to serving the agency that employs them, may well be driven to resist orders that do not comport with their understanding of their jobs.

Admittedly, the defunding of agencies—if successfully passed—is likely to effectively limit the work that agencies can do. But even that is not likely to have the impact Trump seems to expect because rescinding a regulation takes at least as much effort as passing one to begin with. Under the Administrative Procedure Act, agencies that pass a regulation must follow the same process in rescinding it. In addition, agencies that change their mind on how to (de)regulate must find enough support in the record for the new action. This can make it very challenging for agencies to reverse course, even if they could have chosen not to regulate to begin with. This means that real commitment to unwinding regulatory burdens requires—perhaps counterintuitively—a willingness to invest in the work of agencies. Reducing the funding of an agency like the EPA by 31%, as the budget currently proposes, will similarly reduce the agency’s ability to review or reconsider any existing regulations.

Trump’s signing of thirteen bills reversing the promulgation of Obama-era regulations has been heralded by the administration as a key success and by supporters as a significant legacy. It is true that, prior to the Trump administration, the twenty-three-year-old act had only been used successfully once (to overturn a regulation on workplace ergonomics under President George W. Bush). It is also true that these actions are legitimately deregulatory: they undo, in many cases, years of work at agencies, and the act bars agencies from issuing substantially similar rules in the future. Supporters of agency effort and supporters of the policies imbedded in these rules—including a Federal Communications Commission rule preventing Internet-service providers from tracking and selling customer’s data without their permission, a Department of Interior rule protecting streams from coal mining, and a rule from the Social Security Administration making it more difficult for mentally impaired persons to acquire firearms—should be (and are) dismayed.

Yet, it would be a mistake to think that these regulatory cancellations substantially change the regulatory landscape. During President Obama’s two terms, agencies issued many thousands of regulations (as they did under President George W. Bush and President Bill Clinton). By some counts, 140 of these Obama-era regulations were eligible for cancellation under the CRA, which can be used only within sixty days of a regulation being presented to Congress. Of these, only thirteen have been canceled. Furthermore, precisely because the CRA can only be used on recently presented rules (in this case, those presented on or after June 13, 2016), none of these rules had been in effect for more than a few months. Thus, while these actions are being widely viewed as significantly deregulatory, Congress’ actions basically turn the clock back to the regulatory status quo in June of 2016.

Finally, consider the likely impact of Trump’s rescission of Obama’s guidance on the social cost of carbon. Agencies were told that the guidance requiring them to use the centralized estimate of the social cost of carbon was rescinded, but this is very unlikely to lead agencies to actually stop using an economic estimate of the likely impact of climate change. Many agencies know themselves to be statutorily required to use some estimate, and the estimate from President Obama’s International Working Group is likely to prove a powerful and easy focus. Not to mention that switching course on the science they rely upon is likely to smack courts as arbitrary and capricious. Furthermore, because reviewing and keeping up with climate science is so incredibly burdensome, agencies are likely to continue to stick with the IWG estimates for some time, rather than having to invest on their own in additional research. As a result, though agencies may begin explicitly noting the domestic vs. international impacts, as Circular A-4 requires (and, in my view, as they should have been doing already), they are otherwise likely to continue cost-benefit as usual—or face judicial reversal. This means that, when carbon emissions would cause too much harm to be cost-justified, regulations will not be promulgated, even when they offer other significant benefits. Or, in other words, though the order seems to be deregulatory on its face, in fact agencies are likely to continue doing largely what they were doing before the order—just with some additional fragmentation across agencies and, admittedly, with a lesser ability to update given new science.

The important irony of all of these actions is that they actually make things worse for the groups they purport to help—and particularly for business—even as they otherwise largely replicate the status quo.

People who are naïve about regulation often suggest that it is bad for business. The reality is much more complex; in fact, deregulation can be just as bad for business and, in some cases, even worse. At least three factors contribute to bad-business deregulation: regulatory uncertainty, which makes business planning costly and risky; undermining of public confidence in industry products, which can bleed both product demand and shareholder value; and regulatory fragmentation, which increases compliance costs to comply with multiple (state or federal) standards (as when the federal government deregulates and various states create replacement regimes or when multiple federal agencies adopt varying standards).

Unfortunately, fake deregulation implicates all of these. It undermines certainty, as industry must constantly occupy two possible postures in anticipation of possible deregulation. This is, for example, what many industries face in deciding whether to invest, as would be required under the Clean Power Plan, or whether Trump’s direction to the EPA to reconsider the plan may mean that those investments would be wasted. It is also implicated by Congress’s unpredictable cancellation of regulations using the CRA.

Fake deregulation also undermines public confidence; this may lead not only to increased private lawsuits against companies that are perceived to be less-well regulated, but also to consumer and shareholder suspicion, e.g., of chemical products or drugs. This is what happened under Reagan’s ill-fated attempts to deregulate the EPA; by the time Willliam Ruckelshaus was called in to address the public relations nightmare Reagan’s attempts to deregulate caused, chemical-company executives were first in line to plead desperately that the EPA rebuild public confidence by strengthening perceived regulations. Similarly, drug companies are deeply uneasy by potential deregulation at the FDA: if drugs are perceived as risky, they just won’t sell as well.

Finally, fake deregulation forces companies to deal with costly regulatory fragmentation in two ways. First, as with Trump’s newly decentralized approach to the social cost of carbon, businesses must deal with the potential of differing, and even competing, standards for carbon emissions across agencies. At the same time, companies must prepare for the possibility that consistent federal standards may be rescinded or delayed, plunging them into a twilight of state-specific regulations, as may happen with proposed weakening of federal fuel-efficiency requirements in cars.

Trump’s anti-climate change rhetoric is likely to have a similar “worst of all worlds” effect on the other chief stakeholders in climate policy: other powerful nations. The worst situation for the U.S. diplomatically is for it to be perceived as doing little to address climate change, while simultaneously bearing significant costs to limit or to mitigate climate change. Because of Trump’s rhetoric, this is the situation in which we seem to find ourselves. For the reasons discussed above, agencies are likely to generally continue with much the same policies they had before in valuing and accounting for likely climate-change impacts—or face reversals by courts. This means that the U.S. is likely to continue, as a nation, to make very substantial federal investments in reducing climate emissions. Unfortunately, the U.S. will receive no international credit for that effort because of President Trump’s rhetoric, which makes it sound as though the U.S. is stepping back from its climate obligations. The impact of this is all the greater because usually countries try to do just the opposite: they claim they are doing more to address climate change than they actually are. It is as if we are telling everyone that we never pick up our dog’s poop, even as we secretly pick it up when no one is looking. No one likes picking up dog poop, so it’s believable—though antisocial—to claim that we aren’t doing it. But, that makes it even less likely that others will discover that we are, in fact, taking on an unpleasant, but necessary, job.

In sum, the first 100 days of Trump’s administration have been marked by significant sound and fury, with bombastically deregulatory rhetoric combined with high-profile actions. Yet, these actions, while appearing deregulatory on their face, actually largely entrench the status quo. Fans of the status quo may feel as though they have dodged some poorly fired bullets, but they should also feel saddened that opportunities to make regulation legitimately better have been squandered and that public and international confidence have been pointlessly undermined.

*  Professor of law and University Scholar, University of Illinois College of Law. She researches and teaches on risk regulation, administrative law, and environmental law.