Regulation Czar Neomi Rao Discusses Deregulatory Agenda

In his State of the Union address last month, President Donald J. Trump patted himself on the back for the economic boom and the steady drop in unemployment over the past year. Many economists agree that he ought to take some credit, and suggest his deregulatory push has played a role. To discuss the Trump administration’s regulatory achievements, Neomi Rao, the president’s appointee for administrator of the Office of Information and Regulatory Affairs (“OIRA”) last week joined the Federalist Society’s Free Lunch Podcast.

Last year was “a banner year for regulatory reform,” Rao said in the beginning of the podcast.

When Trump took office, he signed Executive Order 13771, ordering agencies to eliminate two regulations for every new regulation added. It also capped the net cost of new regulations to zero dollars. This means that for every new dollar in regulatory costs, one offsetting dollar had to be cut from regulatory costs elsewhere.

Rao said that the administration lived up to Trump’s campaign promise – and then some. For every new regulation added, 22 regulatory actions were cut, which she said far exceeded his promise. Additionally, the net savings for Americans on regulations was $8 billion, also exceeding his promise. The administration also halted 1500 new rules proposed under the previous administration because, Rao said, it wants to analyze the scope and content of all regulations.

But more important than these small changes, according to Rao, the administration is striving to make structural and cultural reform, which would hopefully extend into future administrations. “We want to continue with the momentum from the past year and with the success that we had,” she said.

For example, Rao indicated that agencies must properly follow the Congressional Review Act (“CRA”), which Rao claims requires them to submit proposed regulations to OIRA, so it can determine whether it imposes a cost of $100 million or more. If it does, then OIRA sends the proposed regulation to Congress for approval. Agencies that don’t comply, she said, risk some of their rules losing legitimacy.

As Cause of Action Institute has pointed out over the past year, there are hundreds of rules that are currently vulnerable to be repealed under the CRA that have yet to be received by Congress. For example, last month Cause of Action Institute released an investigative report revealing the IRS has dodged compliance with the CRA and other oversight mechanisms by suggesting that its rules have no economic impact, a suggestion that we have argued is false and intended to shield the agency’s actions from oversight.

Apart from the economic effect of excess regulations, Rao said OIRA is working to make sure the government is more respectful of the separation of powers and more transparent. Because only Congress has the power to make laws, Rao said it can be dangerous to increase the power of the executive branch to the extent that it is making a lot of rule changes. To improve transparency, OIRA will ensure that agencies comply with a federal law that requires they give public notices of new rules and regulations so that the public and stakeholders have an opportunity to voice their support or opposition. Additionally, Rao said OIRA will be working to reduce paperwork for businesses to save them cost and time.

The Trump administration has made progress in the past year to cut regulatory red tape. Hopefully the administration can continue going in this direction with a series of structural changes to scale back the administrative state.

Tyler Arnold is a communications associate at Cause of Action Institute.

The White House Should Follow Arizona Governor Ducey’s Lead and Implement an Online Portal Where Americans Can Suggest Regulations to Eliminate

On January 9, 2017, Arizona Governor Doug Ducey announced a new program designed to reduce outdated and burdensome regulations and to promote economic growth and job creation. His goal is to eliminate 500 regulations by the end of 2017.  To achieve this goal, Governor Ducey created a website—RedTape.AZ.Gov—where Arizonans can “crowdsource” recommendations on which regulations should be eliminated and submit those recommendations directly to the governor’s office.[1]  The website provides an easy, streamlined way for citizens to assist in the regulatory reform of their state.  This approach recognizes and honors what F.A. Hayek called the knowledge problem, that is, that the information necessary to make informed and efficient decisions is decentralized and that the top-down model is doomed by its arrogance.

President Trump’s White House should follow suit if it is serious about reducing the strain old regulations put on the country. President Trump issued Executive Order 13,777 on February 24, 2017, which requires that agencies designate a Regulatory Reform Officer (RRO) to implement a regulatory-reform agenda that implements, inter alia, Executive Order 13,771, which requires agencies to remove two regulations for each new one they issue.[2]  Neither of those orders contain a way for ordinary Americans to provide transparent input into this important process.  Several agencies have decided to open public-comment periods so that stakeholders and the public can provide input, but this approach leaves the comments scattered by agency and makes it difficult to aggregate.[3]  In addition, not every agency has decided to offer a public-comment period, leaving ordinary Americans without a voice.

The White House subsequently issued Executive Order 13,781 on March 13, 2017.[4]  This order created a website that allowed the public to submit comments on ways to optimize and reorganize the federal government.  While Executive Order 13,781 is a step in the right direction, it contains two fatal flaws.  First, the comment period closed on June 12, 2017 when it should be kept open permanently.  Second, the White House said it received over 100,000 comments during the comment period, but those comments are not available to the public.[5]  Cause of Action Institute submitted a FOIA request to the Office of Management and Budget, which administered the website, seeking access to those comments.[6]  Even though that request is still pending, the White House can take immediate steps to launch an improved website.

To foster and promote transparent regulatory reform, Cause of Action Institute recommends the White House launch a new website devoted to receiving recommendations from the public.  The recommendations could then automatically be forwarded to each agency’s RRO.  To ensure a transparent comment process, the recommendations should be accessible to the public and easily searchable by agency, topic, regulation identifier number, and other filters.  The website could foster public discourse by allowing the public to upvote or downvote comments, respond to specific comments, and suggest related regulations to comment on.  Finally, the website should not have a deadline for submissions but instead permanently allow Americans to make recommendations to reform the administrative state.  By providing a central, permanent website for submitting and reviewing recommendations, the White House can achieve its regulatory reform agenda more efficiently and promote accountability while ensuring that all Americans have a voice in the process.

Travis Millsaps is counsel at Cause of Action Institute.

[1] Press Release, Gov. Doug Ducey, Governor Ducey Announces RedTape.AZ.Gov (January 9, 2017), https://azgovernor.gov/governor/news/2017/01/governor-ducey-announces-redtapeazgov.

[2] See Exec. Order No. 13,777, 82 Fed. Reg. 12285 (Mar. 1, 2017), https://www.whitehouse.gov/the-press-office/2017/02/24/presidential-executive-order-enforcing-regulatory-reform-agenda; Exec. Order No. 13,771, 82 Fed. Reg. 9339 (Feb. 3, 2017), https://www.whitehouse.gov/the-press-office/2017/01/30/presidential-executive-order-reducing-regulation-and-controlling.

[3] See Evaluation of Existing Regulations, 82 Fed. Reg. 17793 (proposed April 13, 2017), available at https://www.regulations.gov/document?D=EPA-HQ-OA-2017-0190-0042.

[4] See Exec. Order No. 13,781, 82 Fed. Reg. 13959 (Mar. 16, 2017), https://www.whitehouse.gov/the-press-office/2017/03/13/presidential-executive-order-comprehensive-plan-reorganizing-executive.

[5] See Reorganizing the Executive Branch, The White House, https://www.whitehouse.gov/reorganizing-the-executive-branch (last visited June 29, 2017).

[6] Press Release, Cause of Action Institute, White House Should Release 100K Public Comments on Reforming Government (June 19, 2017), https://causeofaction.org/white-house-release-100k-public-comments-reforming-government/.

Can FTC Ignore the Law to Expand its Power to Regulate Internet Providers?

Cause of Action Institute (“CoA Institute”) has filed an amicus curiae (“friend of the Court”) brief in the U.S. Court of Appeals for the Ninth Circuit in FTC v. AT&T Mobility LLC (“AT&T”) in support of AT&T during the pendency of rehearing en banc of an appeal regarding whether the Federal Trade Commission (“FTC” or “Commission”) has statutory authority to regulate common carriers such as Internet Service Providers (“ISPs”) and telephone companies under Section 5 of the FTC Act.

In September 2016, a unanimous three-judge Panel on the U.S. Court of Appeals for the Ninth Circuit ruled that because the plain language of the FTC Act categorically exempts common carriers like AT&T from FTC regulation under Section 5, the FTC lacks statutory authority to regulate businesses like AT&T. (Instead, such businesses are regulated by a different federal agency, the Federal Communications Commission (“FCC”) under a different federal statute, the Communications Act.)  Consistent with the judicial role and respect for the separation of powers, the Panel explained that “[i]t is not for us to rewrite the statute so that it covers only what we think is necessary to achieve what we think Congress really intended.  That is a job for Congress, not the courts.”

The FTC subsequently filed a petition for rehearing en banc supported by a number of “friend of the Court” briefs arguing that the full Ninth Circuit should vacate the Panel decision and rehear the case because, among other things, the Panel decision was inconsistent with their views regarding sound public policy and left a supposed “regulatory gap” that the FTC should be allowed to “fill.” On May 9, 2017, the Ninth Circuit granted the FTC’s petition.

Concerned about this development, our brief argues that the Court should decide the case the same way the Panel did; that is, calling balls and strikes and deciding the case based on the statute’s plain text rather than a federal agency’s subjective views on what it thinks is enlightened public policy for the entire country. Our brief argues that such an approach respects Congress’s legislative role under Article I of the U.S. Constitution, as well as the separation of powers.  That is because under the U.S. Constitution only the People’s elected representatives in Congress—not a federal agency like the FTC or FCC and not a federal Court—are allowed to rewrite federal law in response to public policy arguments.

As our brief also notes at pages 3-4: “CoA’s interest in this case also stems from its view that, regardless of whether the FTC’s policy goals are sound, the FTC has now “spun out of the known legal universe and … [is] now orbiting alone in some cold, dark corner of a far-off galaxy, where no one can hear the scream ‘separation of powers.’”

These fitting words, describing FTC’s recent forays in Art. III Courts under Section 5, are not hyperbole, but instead reflect a very disturbing reality. FTC’s self-appointed mantle as perverse executive-agency posse comitatus, a poseur arrogant and lawless unto itself, whose overreach and overregulation do not serve the American people or the public interest.

The full brief can be found here.

Patrick Massari is assistant vice president at Cause of Action Institute

Make the FDA small again

FDA regulation doesn’t just inconvenience Americans – it puts their lives at risk

Back in January, President Donald Trump vowed to cut the Food and Drug Administration’s (FDA) regulations by 75-80 percent, a dramatic policy shift from his predecessor who oversaw regulatory costs skyrocket to more than $100 billion annually. As debate centers on Dr. Scott Gottlieb, the president’s nominee to be the next FDA commissioner, Americans should follow this process closely.

No drug can be marketed in the United States without FDA approval. Over the years, the FDA kept numerous drugs off the market that were approved in other developed countries. According to an article published by the CATO Institute, one doctor estimates that these drugs could have prevented 200,000 American deaths over the last 30 years. One example is pirfenidone, a drug to treat pulmonary fibrosis, which didn’t get approved in the United States until 2014 even though it was marketed in Japan in 2008, Europe in 2011, and Canada in 2012. The FDA was advised by its own advisory committee to approve the drug in 2010, but the agency waited another four years after demanding yet another study on the matter.

Between 2010 and 2014, 150,000 Americans died from idiopathic pulmonary fibrosis, a disease that may have been treatable with this drug. Patients should not be banned from trying experimental medication if they and their doctors believe it is the best choice. The best way to speed up the process is for the FDA to allow the free market to function. The more power we give the FDA, the higher the risk of the agency cracking down on states that allow more freedom to terminally ill patients to make decisions for themselves.

This isn’t a conservative or liberal issue. This is an issue of saving lives and allowing sick Americans the right, with appropriate counseling on the risks, to make informed choices about trying experimental therapies.

The Boston Globe reported a troubling story about a woman who had two sons, both diagnosed with the terminal disease muscular dystrophy. The FDA allowed one of her sons to improve with the help of an experimental new drug, while forcing her to watch idly as her other son’s condition continued to worsen. Her younger son, Max, nine years-old at the time, qualified for a clinical trial of the experimental drug eteplirsen, while her older son, Austin, 12 at the time, did not. After 16 weeks, Max began to improve, which caused her to try to speed the FDA’s approval process for the drug.

The mother submitted an application for Austin again in 2013, and he was finally allowed to participate in a trial beginning in 2014. The FDA, however, didn’t approve the drug for everyone else for another two years.

Americans want safe drugs, but no one wants a bloated bureaucracy at the FDA to decide which terminally ill patients can and cannot benefit from a medicine that seems to be working. Giving this medicine to both sons earlier would have allowed them to improve together, but FDA regulators took away the right of this family and their doctor to make that decision.

There are many more examples. As the CATO article reports, individuals with Alzheimer’s were denied THA, individuals with cardiac problems had to wait for beta-blocker approval, individuals with kidney cancer were denied Interleukin-2, and AIDS patients died while the FDA debated whether AZT was cost-effective.

Multiple surveys by the Competitive Enterprise Institute show that medical professionals disapprove of the FDA’s slow pace in approving promising new drugs. A majority of Orthopedic Surgeons have said FDA’s approval process is too slow and hurts patients. A staggering 70 percent believe the current law should be changed to allow physicians access to unapproved therapies.

This debate is over whether individuals should have autonomy to make informed decisions about medical procedures, or whether an overly cautious federal agency can prevent them from trying what their doctor thinks is best. The solution is to get the federal government out of people’s lives and drastically cut the FDA’s role. Unelected bureaucrats who don’t know the individuals involved or the unique circumstances of the impacted families should not be making life-and-death decisions.

President Trump has signaled he wants to reform and streamline agencies’ regulatory power. In February, the president signed an executive order that requires all federal agencies to create a task force to help “alleviate unnecessary regulatory burdens placed on the American people.” The FDA is a prime target for such reform.

In 2012, Dr. Gottlieb, said that the review culture at the FDA needs to change to encourage innovation. He has also long been supportive of deregulation. Let’s hope he follows suit with what President Trump has promised to do and implements common sense reforms at FDA to give patients more freedom to make decisions for themselves.

Fishermen in New England Face Another Costly Regulation

The New England Fishery Management Council (“NEFMC”) held a meeting on April 20, 2017 [pictured above] to discuss a controversial omnibus amendment that would require more fishermen to pay for at-sea monitors, which should be the government’s responsibility.

The monitors would cost between $710-$818 per day at sea, which is more than the average daily revenue of a fisherman, rendering fishing unprofitable for many smaller-scale boats.

Cause of Action Institute Vice President Julie Smith attended the meeting and questioned the legality of the rule change, citing the Magnuson-Stevens Act, which, she said, does not permit the Council to implement this regulation. She advised the Council to take a different course of action to avoid likely court challenges to overturn the amendment. Listen to Smith’s full remarks here:

 

In a written comment submitted on April 11, 2017, Smith provided alternatives for the council to consider. The council could scrap the amendment entirely, work with the National Marine Fisheries Service to get the funds, or petition Congress for the funds.

However, she said shifting the cost burden onto fishermen would be “ill-advised.”

CoA Institute represents fishermen challenging another industry-funded monitoring program in the Northeast groundfish fishery. In that case, a government study predicted that industry-funded monitoring would result in up to 60 percent of mostly small-scale vessels going out of business—a result that the government blithely characterized as a “restructuring” of the groundfish fleet.  Learn more about the case HERE

Court of Appeals Upholds Decision on Reg That Will Put 60 Percent of New England Ground Fishermen Out of Business

Judges refuse to consider legal arguments, but implore Congress to clarify the law about who should pay for at-sea monitors 

Washington, D.C. – On Friday, the U.S. First Circuit Court of Appeals upheld the District Court’s ruling last summer that a lawsuit filed by Cause of Action Institute (CoA Institute) on behalf of Plaintiffs David Goethel and Northeast Fishery Sector 13 against the U.S. Department of Commerce should be dismissed.

In its opinion, the Court found that the fishermen’s suit was untimely and therefore did not consider the Plaintiff’s legal arguments that requiring fishermen to pay for monitors is against the law.  However, in a rare move, the judges highlighted the devastating economic impacts of the regulation in question, and urged Congress to clarify the law and who should pay for the at-sea monitors.

“I am disappointed by the decision,” Goethel said. “But I’m hopeful that Congress will heed the Court’s direction and clarify the law. It is the government’s obligation to pay for these at-sea monitors. I’ve made a living fishing in New England for more than 30 years and I have never exceeded a single fishing quota. But I can’t afford to fish if I am forced to pay for at-sea monitors.  I’m grateful to Cause of Action Institute for bringing this case forward, and I remain hopeful that Congress will clarify the law to ensure the New England groundfishing industry is not regulated out of existence.”

Northeast Fishery Sector 13 Manager John Haran said, “I’m disappointed that timeliness of the case was the Court’s deciding factor and not the merits of our arguments. The fishermen in my sector can’t sustain this industry funding requirement and many will be put out of business if this mandate remains in place.”

Cause of Action Vice President Julie Smith said, “We are disappointed that the First Circuit did not reach the merits of our case.  While we respect the opinion of the First Circuit, the federal government is clearly overextending its regulatory power and is destroying an industry.  We are considering all of our legal options for judicial review on the merits.  We also encourage Congress and the Administration to act swiftly to ensure that these unlawful regulatory costs do not put an end to the tradition of generations of proud fishermen in New England.”

Background:

In December 2015, the Department of Commerce ordered that fishermen who fish for cod, flounder and certain other fish in the Northeast United States not only must carry National Oceanic and Atmospheric Administration (“NOAA”) enforcement contractors known as “at-sea monitors” on their vessels during fishing trips, but must pay out-of-pocket for the cost of those monitors.  This “industry funding” requirement would devastate the Northeast fishing industry, at the price of many jobs and livelihoods.  The opinion by the First Circuit upholds the lower court’s decision and allows this job-killing mandate to remain in place.

To learn more, visit the Cause of Action Institute website.

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org

Hundreds of Regs Vulnerable to Repeal under Congressional Review Act

Washington D.C. – Cause of Action Institute (“CoA Institute”) today released a list of 835 economically significant rules and regulations that are susceptible to repeal under the Congressional Review Act (“CRA”). While there is a 60-day statutory limit for rules to be reviewed by Congress under the CRA, hundreds of rules have not been properly reported to Congress giving the Trump administration an unprecedented opportunity to repeal costly rules dating all the way back to 1996 when the CRA was first signed into law.

“While Congress is currently reviewing and disapproving numerous regulations from the last year of the Obama Administration, we believe the CRA provides a broader opportunity and Congress should begin examining the rules we’ve identified as well,” said John Vecchione, Cause of Action Institute President and CEO.

Read Cause of Action Institute’s column in The Hill for more information on the CRA and how the Trump administration can pursue an aggressive anti-regulatory agenda by coordinating with Congress.

The Hill

The Congressional Review Act and a Deregulatory Agenda for Trump’s Second Year

By John J. Vecchione

A cold front may have killed-off nearly half of D.C.’s famous cherry blossoms, but Washington gridlock has emerged in full bloom. With the defeat of the Republican “repeal and replace” bill in the House, and the Democrats’ united opposition to the president’s agenda, it’s looking increasingly difficult for Congress to get things done.  Fortunately, there exists a stimulatory, free market weapon in the hands of the Congress and the President to stay on the offensive on deregulating and freeing the economy.

By simple majority vote, the Congressional Review Act (“CRA”) can overturn any regulation that affects a third-party. This is a powerful and underutilized tool. The CRA is not subject to the filibuster and provides the majority with a vast deregulatory agenda with a high chance of success.  Read More

CoA Institute is partnering with Pacific Legal Foundation and several other organizations on the Red Tape Rollback project, an effort to identify rules that have not been properly reported to Congress under the CRA.

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org