How Trump just empowered the bureaucracy

President Donald Trump, as promised, has begun tackling the regulatory state. In addition to telling CEOs he’s going to cut regulations by 75 percent and feinting toward a rollback of the Dodd-Frank regulations (more on that here), Mr. Trump made quite a splash by signing Executive Order 13771, which requires “that for every one new regulation issued, at least two prior regulations be identified for elimination.”

There are many reasons why Trump’s order is unusual and possibly ill-advised. For example, the order is poorly drawn: It doesn’t force repeal, it simply calls for the agency that writes a new regulation to “identify” two for (presumably future) repeal. Second, and more forcefully, as Rachel Potter clearly points out, repealing a regulation requires the same, often lengthy, process as adding a new one. Third, its reach is arguably far narrower than Trump might have you believe (or might even himself believe): Some regulations are required by statute (and therefore beyond the reach of the president’s unilateral authority) and many others are issued by independent regulatory commissions, like the Securities and Exchange Commission (SEC), a point that I visit here.

But the point I want to make has to do with the combination of a seemingly narrow question — what is a regulation? — and how EO 13771 proposes to answer this question.

What is “a regulation”? As advertised, the order says “one regulation in, two out.” This is deceptively simple. Essentially, it avoids the question of what constitutes one, or two, or 10 regulations.

Even in terms of regulations “going in,” it’s unclear what a new regulation is. Every change to regulations are made through a curving and sometimes tortuous process, ultimately culminating in the agency printing a “final rule” in the Federal Register.

Not every “new regulation” is a new regulation. After a rule is published in the Federal Register — and this is the rub — the rule is then “codified” into the Code of Federal Regulations (CFR). It is common for “a new regulation” to affect/rewrite multiple parts of the CFR. But we’ll get there in a second.

To focus our discussion, let’s consider a (randomly selected) new rule promulgated by the Office of Surface Mining (or OSM, located within the Department of Interior) on the day I wrote this post: February 6, 2017.

The rule “adjusts for inflation the level of civil monetary penalties assessed under the Surface Mining Control and Reclamation Act of 1977.” In other words, this rule updates the penalties for breaking federal, mostly environmental, laws regarding strip-mining coal.

This rule, which is quite long, has two notable features:

1. It is mandated by a 2015 statute that amends the original 1977 Act, and
2. it is revising a preexisting list of penalties.

The first of these points has been partially addressed by others linked to above: Congress told the Office of Surface Mining to keep this regulation up to date (by adjusting the penalties for inflation). The president can’t just say, “yeah, nah … don’t follow the law.” But the second point is my real focus here: Is this a new regulation?

The answer is ambiguous because, well, it is a new publication in the Federal Register. But, it is replacing an existing regulation. A simplistic reading of EO 13771 would be that OSM must take at least one other regulation out in order to promulgate this one. (And that’s counting the one it replaces as a regulation “identified for repeal.”)

What’s “another regulation”? Let’s suppose that OSM was required to find identify regulation to repeal. First, why not identify some regulation in some other agency’s traditional remit? After all, it is important to note that Mr. Trump’s order does not require that the agency identify for repeal regulations for which that agency is responsible.

For example, the OSM is responsible for Title 30, Chapter VII, of the Code of Federal Regulations, but why not identify some language in Title 40, Part 503 (overseen by the Environmental Protection Agency), which deals in part with disposal of sludge in strip mines? After all, these regulations deal with issues within the OSM’s remit. But, they’re enforced, and were presumably written by, the EPA.

This could get crazy. To push a bit further, what if all agencies agreed on two “regulations” that they would repeatedly identify for repeal when they send new regulations to the Office of Management and Budget (OMB)? Who is going to keep track of this? After all, the motivation behind EO 13771 is presumptively that we can’t trust bureaucrats … they’re going to game this! (Note: I’m being sarcastic. Nobody loves regulations, but I’m a big believer in the idea that bureaucrats are like the rest of us: They’re citizens who are just doing their jobs, in spite of the venom spewed by some toward them.)

But seriously, what is “a” regulation? Let’s set aside the possibility of identifying “other agencies’ regulations” in an attempt to circumvent this procedurally naïve order. Even if OSM faithfully pursues the spirit of the order, there are still important ambiguities to be resolved, such as what counts as an existing regulation.

For example, is Part 772 of Title 30 a “single regulation”? After all, it is the part of the CFR that describes “requirements for coal exploration” in the United States.

Or, rather, is Section 11 of Part 772 a single regulation, which describes “notice requirements for exploration removing 250 tons of coal or less”?

Or, narrowing it further: How about §772.11(b)(5), which requires “a description of the method of exploration to be used and the practices that will be followed to protect the environment and to reclaim the area from adverse impacts of the exploration activities in accordance with the applicable requirements of part 815 of this chapter”?

I get it, I get it: enough. There’s a lot of words, and they are arcane, hard for an outsider (including me) to follow, and it’s tiring. But, that’s the point. The question of whether Part 772 of Title 30, or Section 11 of that Part, or Section 11(b)(5) of that part of Title 30 is “a regulation” is an important question that is difficult, if not impossible, to answer in any sensible way.

The power to define. So, you might ask, who is going to define what is, and is not, “a regulation”? EO 13771 does say who will answer it, but not how. Specifically, Section 2(d) of EO 13771 states (emphasis added):

The [Director of the OMB] shall provide the heads of agencies with guidance [about], among other things, processes for standardizing the measurement and estimation of regulatory costs; standards for determining what qualifies as new and offsetting regulations; standards for determining the costs of existing regulations that are considered for elimination; processes for accounting for costs in different fiscal years; methods to oversee the issuance of rules with costs offset by savings at different times or different agencies; and emergencies and other circumstances that might justify individual waivers of the requirements of this section. The Director shall consider phasing in and updating these requirements.

I’ve emphasized the key provision, but the scope of the determinations is left to the director of the OMB. Mr. Trump has nominated Rep. Mick Mulvaney (R-SC), who is facing some struggles with his confirmation in the Senate, to head the OMB.

As a result, if Trump’s deregulatory push is actually effective, and Mr. Mulvaney takes the job (as I suspect he will), Rep. Mulvaney is going to be the most powerful bureaucrat in Washington.