Add One, Take Two Away

Prior to his inauguration, President Trump promised a 75% reduction in regulations. I was left scratching my head about what he meant. Did he want the Code of Federal Regulation to be 75% shorter? How do you decide where one regulation begins and another starts? What about statutes enacted by Congress that specifically mandate the promulgation of new regulations? Isn’t repealing a regulation itself a new rule-making?

President Trump followed up on the promise and issued a new executive order. Whenever an agency publicly proposes a new regulation, it must identify at least two existing regulations to be repealed.

Additionally, the order requires the net incremental cost for fiscal 2017 to “be no greater than zero.” The cost of new regulations should be offset by existing rules that will be rescinded. I assume this add one, take away two is being put in place to achieve his 75% promise.

It looks like Dodd-Frank is the biggest target. I’m not sure the executive order will do it. Dodd-Frank mandated many new regulations. Repealing those regulations would seem to require an act of Congress.

I focus on the Securities and Exchange Commission, so I decided to take a closer look at the executive order. First up is what was meant by regulation.

“For purposes of this order the term “regulation” or “rule” means an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe
the procedure or practice requirements of an agency…”


I think this executive order could affect not only the promulgation of new rules, but could also affect staff guidance. I think a rule-making is general applicability and guidance is particular applicability. That could affect information updates and staff guidance. Could it even affect no-action letters? I think you can read it that way. Ultimately, it will be the SEC commissioners interpretation of the executive order that matters.

Of course, there is the argument that the SEC is an independent agency and not subject to the executive order. The order itself states that it applies to each “executive department or agency.”

Regardless of whether the order applies, President Trump has lesser power to fire the commissioners on the SEC so they may chose to ignore the executive order. Or they may embrace the concept and begin de-regulating.