President Trump’s Two for One Regulatory Reduction Is Headed to Court

It seems like just a week ago that President Donald Trump signed an Executive Order requiring two regulations be repealed for every new one adopted.  It was. And this week a lawsuit has been filed challenging that executive order.

The lawsuit was filed by Public Citizen, the Natural Resources Defense Council and the Communications Workers of America. In addition to President Trump, the lawsuit tags the Acting Director of the OMB and the current or acting secretaries and directors of many government agencies.

The Securities and Exchange Commission is noticeably absent from the list of defendants. I guess the plaintiffs concluded that the SEC is independent and not subject to the Executive Order.

The plaintiffs are asking the court to prevent the agencies from implementing the order and to kill the executive order because it cannot be lawfully implemented.

According to the complaint, the executive order to repeal two regulations for the purpose of adopting one new one, based solely on a directive to impose zero net costs and without any consideration of benefits, is “arbitrary, capricious, an abuse of discretion, and not in accordance with law.” The complaint spells out the three big reasons the plaintiffs think so:

There is no statute that tells agencies to withhold regulations because of cost. Of course there is the cost-benefit requirement for some regulations. But that is different than saying there are no costs imposed by the regulation.

Second, the Executive Order forces agencies to repeal regulations that have gone through the administrative process and concluded that they comply with the enabling statute and advance the purpose of the statute. The complaint stops short, but in my view the argument is that the Executive Order is trying overturn legislation passed by Congress authorizing regulation.

Third, no governing statute authorizes an executive agency to base its decision making on there being zero net cost across multiple regulations.

The second argument is certainly applicable to many of the financial regulations imposed by Dodd-Frank. The SEC is taking steps to rollback the Extraction Disclosure Rule.  A rule that was specificaly required by Dodd-Frank.  (Of course, the SEC is not specifically subject to the Executive Order.)

The two big problems with the lawsuit are standing and ripeness.

Two of the causes of action are violations of the constitution, violating the separation of powers and the Take Care Clause. That last one is new one for me. Under Article II, Section 3, the President has duty to “Take Care that the Laws be faithfully executed.” I’m skeptical that individual citizens have standing under these provisions. Congress is not about to bring suit.

The other causes of action would seem to not be ripe for suit until an agency actually starts trying to repeal regulations because of this order.