Trump’s 2-For-1 Order: Still Arbitrary and Capricious After All These Months

Posted on September 15, 2017 by Seth Jaffe

In June, I posted about Foley Hoag's brief in support of those challenging Executive Order 13771, the so-called “2 for 1” EO.  By ignoring the benefits of existing and proposed regulations, the Order ignores the purposes behind the legislation pursuant to which regulations are promulgated.  The Order is thus the definition of arbitrary and capricious.

Late last week, OMB issued a memorandum to executive agencies, requiring them to develop “Regulatory Cost Allowances” for FY 2018.  The memorandum is only one page.  In that one page, it uses the word “cost” 11 times.  The word “benefit” does not appear.

The memorandum notes that the purpose of the Order is to “lower regulatory burdens” and “to be prudent and financially responsible in the expenditure of funds, from both public and private sources.”

I hate to beat a dead horse, but one would have thought that the absolute size of the “regulatory burden” is not what’s relevant; what’s relevant is whether that regulatory burden is exceeded by the benefits of proposed regulations.  One would also have thought that requiring expenditures of private funds for regulatory compliance would be seen as “prudent” if those compliance costs are exceeded by the benefits.

Indeed, one would have thought – and I do still think – that seeking to lower regulatory compliance costs without regard to the benefits provided by government regulations is just plain crazy.

Silly me.

Trump's "2 for 1" EO: Can You Say "Arbitrary and Capricious"?

Posted on June 6, 2017 by Seth Jaffe

Last month, Mark Walker posted about Executive Order 13771.  Mark’s post was generally favorable, noting that a number of other countries have implemented some version of what is known as a “regulatory budget.”  This post provides something of a counterpoint to Mark’s. 

Put simply, I think that the Order is indefensible.  It’s not about regulatory reform.  It’s a transparent attempt to halt environmental regulation in its tracks, without regard to the benefit those regulations provide.

This week, on behalf of our client, the Union of Concerned Scientists, Foley Hoag filed an amicus brief in support of the plaintiffs in the case challenging the EO.  One paragraph from the brief pretty much summarizes the argument:

It is important to note, as Executive Order 13771 acknowledges, that agencies are already required, where not prohibited by law, to ensure that the benefits of regulations exceed their costs. Thus, the only impact of the Executive Order is to prohibit agencies from promulgating regulations whose benefits exceed their costs, unless they eliminate two other regulations whose benefits also exceed their costs. This is the definition of unreasoned decisionmaking. It is also a thumb in the eye of Congress, which enacted public health and environmental statutes in order to benefit the public.

It is a bitter irony that the government is defending the EO in part on the basis that it is just another in a long line of regulatory reform EOs, even though the EO is in fact a repudiation of those prior orders, not an extension of them.  This order is not about cost-benefit analysis; it is about cost-only analysis.  By definition this approach ignores the public benefits that the underlying statutes are intended to provide.  Thus, the “savings clause” cannot save the EO, because there is nothing left to save.