Pareto Policy Solutions, LLC

advancing innovation through smart regulation

Pareto Policy Solutions, LLC is a policy analysis and advocacy firm committed to advancing sustainability through “smart” regulation: regulation that rewards, and does not penalize, superior performance.  Often, such actions leverage advances in science and technology and make the regulatory program itself more effective as well as more efficient.

Post-Election Outlook on Federal Regulation and Regulatory Reform

The election results herald significant changes for public policy, including federal regulation and efforts to reform the federal regulatory process. Here is what can be expected in the coming months:

Given Republican control of both the White House and Congress in 2017, the congressional “lame duck” session could be relatively short and non-controversial on regulatory matters. Democrats will be unwilling to give Republicans a victory now (such as regulatory riders on appropriations bills) and Republicans will be willing to wait until 2017 to get more of what they want with their new majority in place. Expect a relatively clean continuing resolution (CR) and few votes on anything of substance.

The Obama Administration will likely ramp up its push to get "midnight regulations" out the door, even though many might not survive for long in 2017. This is a dangerous time because outgoing administrations tend to issue bad regulations (i.e., those that are bad on substance and overtly political) between election and inauguration.

Here are six recommendations for the Trump transition team (and one can bet these are already well-baked) based on George Washington University’s Susan Dudley's recent article in Forbes:

1--Review and prioritize executive orders. The transition team should seek to retain the executive orders on regulatory review (e.g., EO12866 in particular) for now and perhaps expand/revise these later (i.e., within a year).

2--Choose a new regulatory czar (i.e., Administrator of the OMB Office of Information and Regulatory Affairs) carefully. This should be a top priority; the nominee's papers should be sent up to the Senate as soon as an OMB Director is confirmed. OIRA should have a more powerful role in the Trump Administration (greater scrutiny of major regulations and fewer major regulations) than it had under President Obama.

3--Prepare for the first day by issuing a temporary moratorium on new regulations and extending the effective date of problematic rules that have not yet gone into effect. 

4--Determine which existing regulations are to be reversed, and begin the process as soon as possible. This will take at least a year or more and drain resources from new initiatives, so choose with care.

5--Change enforcement of specific regulatory programs by announcing enforcement discretion (no enforcement) or a change in enforcement. This is often easier than eliminating problematic rules. 

6--Plan to work with the judiciary on rules under court review. For example, how will the Trump Administration defend the Clean Power Plan or the 2015 ozone standard?

With respect to items 2-6, I recommend that my clients take their current list of pending (and recently finalized) regulations of concern and figure out into which category, if any, to place each one in anticipation of discussions with the new Administration. 

The new Congress will likely try to disapprove one or more Obama midnight regulations under the Congressional Review Act (CRA). Which ones? The best candidates include only those (1) issued late enough in the Administration to fall under the CRA, (2) impose significant costs across multiple sectors of the economy and across all regions of the country, and (3) are opposed by the new President. This is an area where I would expect strong coordination between the White House and Congress. Few regulations are likely to make the cut.

In 2017, expect legislative reform of the regulatory process, but only if proponents can unify behind a reform concept. Newly reelected Senator Lankford (R-OK) is likely to be in the driver's seat on this issue, and all his hard work on specific reforms in the current Congress will serve him well. (He should be wary about asking for too much! The Senate is still a tough venue for regulatory reform.)

Regulatory reformers should be wary about asking for too much---success has not come to those who overreach in this area, and yet the business community and conservative Members of Congress always (yes, always) get too greedy on regulatory reform when Republicans take control of both the White House and Congress.


For further reading:

Susan Dudley, “Memo to the Clinton and Trump Transition Teams”, Forbes, November 1, 2016.

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