A new executive order from President Trump would limit new federal regulations significantly, requiring two existing regulations to be removed for every new regulation adopted. But the devil is in the details, and the order may be difficult to implement as well as unlawful in its attempt to curtail Congressional authority.
Issued Monday, the order is aimed at reducing regulations on small and large businesses—an issue Trump repeatedly stressed during his campaign, blaming what he characterized as over-regulation for stifling economic growth. The order applies to all executive agencies, including those overseeing the banking and financial services industries.
During a signing ceremony in the Oval Office Monday morning, Trump said the order would be “the largest ever cut by far in terms of regulation.” The order calls for the net incremental cost of every new rule issued by a federal regulatory agency for the 2017 fiscal year to be “no greater than zero”—with the costs of implementing new rules offset by savings from repealed regulations—unless “otherwise required by law” or granted special permission by the Director of the Office of Management and Budget. Trump’s nominee for that role, U.S. Rep. Mick Mulvaney (R-S.C.), has yet to be confirmed by Congress.
The order’s “one in, two out” rule will likely be difficult to actually implement—and defies Congressional authority to pass laws requiring regulations, said Laurence Platt, consumer financial services partner in the Washington, D.C., office of Mayer Brown LLP. “The standard that the incremental cost of new regulations shall be no greater than zero really means that there will be no new regulations,” Platt noted. “What does an agency do if Congress mandates an agency to issue implementing regulations? And how can an agency repeal two regulations that Congress previously mandated the agency to issue?” In addition to defying the authority of Congress to enact laws delegating rulemaking authority to agencies, the order also places too much power in the hands of the OMB director, giving whoever holds that role “behind-the-scenes power and authority to set standards for defining regulatory costs and offsetting regulations,” Platt cautioned.
The order follows Trump’s Jan. 20 freeze on forthcoming regulations until Trump’s regulatory agency appointees are given a chance to review them. That order’s effect on the forthcoming Oct. 1 effective date of the CFPB’s final prepaid account rule is unclear, because the CFPB is considered to be an independent agency, rather than an executive agency.
“It really shouldn’t change the job at all,” said Director Richard Cordray of Trump assuming power. “We have an independent mandate to do what we do and we’ll continue to work to protect consumers.” Cordray made his comments at an event hosted by the Wall Street Journal and prior to this week’s order, according to The Hill. “If we’re not going to enforce the law aggressively, then what are we saying?” he said. “Our pace needs to be steady and vigorous.”
Still, if a court ruling declaring the CFPB’s structure unconstitutional is upheld, the agency’s status could change, meaning President Trump’s executive orders may apply to them.
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