Photographer: Andrew Harrer/Bloomberg

Regulatory activity dips to new lows in Trump administration

August 23, 2017 Cheryl Bolen

This analysis was first available to Bloomberg Government subscribers

The pace of regulatory activity has dipped to new lows in the first six months of the Trump administration, bringing welcome relief to businesses beset by rules from the prior administration, but dismaying public safety and civil rights advocates who fear crises are coming.

The Office of Information and Regulatory Affairs, which reviews all significant federal regulations, processed 67 regulatory actions in the first six months of this administration, including notices, proposals, and final rules, compared with 216 actions by the same point in the Obama administration, according to government data.

The question now is whether this pace will continue, or inch back up as agencies complete their assessments of existing rules that can be rolled back and new regulations that are required.

“I’m not sure that this [initial slowdown] portends a permanent future where we can’t effectively process necessary regulations,” Neil Bradley, chief policy officer at the U.S. Chamber of Commerce, told Bloomberg BNA.

But the majority of top political positions at agencies are either vacant or are held by acting officials, Bradley said in a blog post. As a result, agencies lack critical leadership and are unable to get good regulations out the door, which businesses need, he said.

Phase II

To be sure, the business community is pleased with how the Trump administration used its powers, including stopping regulations that hadn’t been finalized and extending those with a pending deadline for subsequent review, Bradley said.

Businesses also were pleased that Congress was able to overturn regulations using the Congressional Review Act, which made the “first phase” of this administration’s regulatory regime successful, Bradley said.

“Now we’re in the second phase,” where the agencies have to do their work, Bradley said.

First up is the deregulatory docket from the Office of Management and Budget that lists 860 proposed regulatory actions that were withdrawn or removed from active status since the fall 2016 unified agenda.

But to deregulate, rules must go through the Administrative Procedure Act process, which takes time, Bradley said.

Biggest Roadblock: Appointees

The “single biggest roadblock at the moment” is the lack of political appointees at the agencies, Bradley said. Roughly 1,200 senior officials must be confirmed by the Senate before they can manage and set policy in various federal agencies and independent commissions.

Although the administration’s executive orders have forced agencies to think about the costs and cumulative impact of regulations, the slowdown in regulating has a lot more to do with not having political appointees in place, Bradley said.

‘Relief on the Horizon’

Small businesses have been impressed with the two-for-one executive order, which requires agencies to eliminate two regulations for every new one they issue, said Dan Bosch, senior manager of regulatory policy at the National Federation of Independent Business (NFIB).

“That’s been effective in limiting some of the aggression of some of the agencies,” he said.

NFIB members have the sense that this administration’s intent is to regulate only when necessary, and to do so in a way that’s smart and flexible for businesses to comply, Bosch said.

Small businesses also have seen agencies’ willingness to review some problematic rules from the prior administration, such as the Labor Department’s overtime rule and the Environmental Protection Agency’s Waters of the U.S. rule and Clean Power Plan, Bosch said.

“They’re going back and looking at those rules to see how they can improve them and make them better for small business to comply with, or getting rid of them entirely,” Bosch said. “So our members are feeling like there’s some relief on the horizon,” he said.

Optimism Up

Regulation had been the second-biggest concern behind taxes in the NFIB’s monthly surveys of its members over the past several years, said Jack Mozloom, the group’s media communications director.

Now, finding qualified employees is up to number two, and regulation has dropped on the list, Mozloom said.

The survey also shows a tremendous demand for new labor and an increase in capital investment, which indicates a healthy small-business sector, Mozloom said.

“How much of that precisely is attributable to the regulatory actions of this administration, it’s impossible for us to measure,” Mozloom said. “But there’s no doubt that it is contributing to their high levels of optimism.”

Rollbacks Alarm Regulatory Advocates

On the other side, Rob Randhava, senior counsel at the Leadership Conference on Civil and Human Rights, and other public interest advocates spoke at a July 26 event held by the Center for American Progress about the potential harms of the Trump administration’s deregulatory agenda.

A big concern is the effort to undo a new rule by the Consumer Financial Protection Bureau to limit binding arbitration clauses, Randhava said.

Also expected are efforts to weaken the qualified mortgage rule, the lack of which helped to cause the financial crisis, Randhava said. Civil rights laws are under attack, including efforts to weaken the Fair Housing Act and the Home Mortgage Disclosure Act, he said.

Another concern is what the Housing and Urban Development and Justice departments are going to do with these laws, Randhava said.

Fate of CFPB

Yet another big question is what happens with the CFPB once Director Richard Cordray leaves, either at the end of his term or earlier, Randhava said.

Depending on who replaces him, consumers could see much of the past six years’ progress undone and be in danger of losing the level playing field they have just begun to gain, Randhava said.

The result is not an “imminent threat” of another 2008 financial crash-like situation, Randhava said. “But we are concerned about policies that make it harder for Americans to rebuild all the wealth that was lost over the past decade or more, [and] which are going to wind up slowing economic growth in the long run,” he said.

Enforcement Down Too

Pamela Gilbert, partner at Cuneo Gilbert & LaDuca and former executive director of the Consumer Product Safety Commission, said the panel, with its Democratic majority, continues to have 3-2 votes on some key penalties and regulations, but that will change soon.

The White House on July 27 sent to the Senate the nomination of Republican Ann Marie Buerkle to serve as chairman of the CPSC. Buerkle has voted “no” on nearly every civil penalty that the CPSC has issued since she’s been there, Gilbert said.

For example, Buerkle has voted consistently against issuing civil penalties when companies know they have a dangerous product but don’t tell the agency, Gilbert said.

Crises Coming

There probably won’t be many new rules and protections coming from the federal government, Gilbert said. Nor much enforcement of existing laws and rules to make companies do the right thing, she said.

“And when that happens, we see crises,” Gilbert said. “Because when that happens, the companies know that they’re not going to get caught, or if they get caught, they’re not going to get penalized.

“And so whatever practices they’ve reined in, they’re going to get sloppier and sloppier, and more willing to flout the law, and the public is going to suffer,” Gilbert said.

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