How Biden Might Dismantle Trump-Era Regulations
By Katherine Johnson, Caroline Cease and Vaishalee Yeldandi
Law360 (November 17, 2020, 3:42 PM EST) –
The incoming administration of President-elect Joe Biden must govern during one of the most challenging periods in American history. That turbulence, however, gives the Biden administration an opportunity to enact bold, comprehensive reforms, many of which will be undertaken through regulatory activity. Biden has already announced that he plans to sign a series of executive orders on day one that will immediately steer the regulatory regime on a new course.
The Biden administration will also likely focus on dismantling regulatory actions from the past four years — dismantling the dismantling, to be more precise. While often unfocused, the Trump administration had one consistent goal: undoing the Obama-era regulatory regime. The Biden administration will likely take early and swift action to reinstate — and in most cases build upon — many of the regulatory efforts from Biden’s eight years as vice president.
Regulations are not the most headline-grabbing aspect of the federal bureaucracy; however, regulatory actions will affect all aspects of American life, especially the economy, the environment and the business climate.
Executive orders and regulatory changes will provide the new president with early wins that can be achieved without Congress, and agency rulemaking across the federal government will be used to implement new policies and legislation. To be effective, the Biden administration will need to arrive with a clear, positive regulatory vision, as well as a nuanced, rule-by-rule plan to strategically dismantle its predecessor’s regulatory efforts.
This article focuses on the reactive steps the Biden administration will likely take in the early months of 2021, rather than the proactive regulatory agenda accompanying new legislation or executive orders. Specifically, we focus on four key regulatory phases and strategic spheres.
- Anticipated regulatory actions the Trump administration will undertake before Jan. 20, 2021, to lock in policy changes;
- Regulatory actions the Biden administration will take immediately after the new president takes the oath of office;
- How the Biden administration can potentially use the Congressional Review Act to strike down a significant number of Trump-era regulations if Democrats take back control of the S. Senate; and
- The legal limitations and available avenues for the Biden administration to rescind or roll back Trump-era regulations already in effect.
November 2020 to January 2021
In the 2 1/2 months post-election but pre-inauguration, federal agencies will dramatically increase regulatory activity. This has occurred during every other previous lame-duck period preceding an administration change, and the Trump administration has signaled that it will be even more aggressive than past administrations.
With its remaining days in power dwindling, we can expect the Trump administration to do all it can to lock in policy changes, especially regarding the federal workforce, immigration, health care, labor and the environment. This will be done by finalizing rules that have already gone through the notice-and-comment process, shortening public comment periods, issuing more interim final rules and direct final rules, and issuing agency guidance documents to bypass administrative process.
Indeed, over the next roughly 65 days, the Trump administration will likely bypass typical notice-and-comment requirements and other administrative necessities to finalize as many rules as possible.
These aggressive tactics were already evident before the election with, for example, the U.S. Department of Labor and the U.S. Department of Homeland Security jointly issuing highly controversial immigration changes as an interim final rule in order to bypass the public comment process and immediately place tougher restrictions on work visas for immigrants with special skills. The administration also has already begun shortening the public comment period from 60 days to 30 days for rules it wants to finalize before Jan. 20.
Regulations issued during the lame-duck period historically are referred to as midnight regulations, and prior administrations have made public attempts to restrict the agencies from overregulating during this time. For example, in 2015, a full year ahead of the election, the Office of Management and Budget issued a memo instructing agencies to submit all regulations in an orderly and consistent manner. The Trump administration has not yet taken any actions indicating that it will attempt to curtail agency regulatory activity during the lame-duck period.
It is expected that Democrats in the U.S. House of Representatives will issue letters to agencies and the White House, using the threat of oversight to limit regulatory actions taken during this period, but there is very little concrete action Democrats can take before January.
Immediate Actions That Will Be Taken by the Biden Administration
Every new administration takes swift action when the new president is sworn in to halt the nonfinal regulatory vestiges of its predecessors. This usually takes the form of a memo, released at noon on Inauguration Day, from the incoming chief of staff to all executive departments and agencies. Ron Klain, incoming chief of staff, will almost certainly issue a similar memo to:
- Withdraw all regulations not yet published in the Federal Register;
- Prohibit agencies from sending regulations to the Federal Register unless there is explicit approval from a specified individual, usually the acting OMB director;
- Postpone all rules that have been published but are not yet effective.
We also expect the Biden administration to immediately rescind Executive Order No. 13771, which required two regulations to be rescinded for each new regulation.
The early days of an administration usually see the regulatory state grind to a halt as new officials get their policy priorities in place; however, the Biden administration will almost certainly come in with a pre-established regulatory plan and agenda in order to hit the ground running. This regulatory plan will have two critical avenues for undoing formal regulatory actions undertaken by the Trump administration: the CRA, if Democrats take back control of the Senate, and rescission through the Administrative Procedure Act.
Congressional Review Act
If Democrats win both Senate runoffs in Georgia and take back control of both chambers of Congress, we anticipate that the Biden administration will roll back some of the late-2020 Trump-era regulations using Congress’ authority under the CRA. Furthermore, while the Biden administration is obviously more likely to successfully apply the CRA controlling both houses of Congress, there are still opportunities to use this mechanism even with a slim Republican Senate majority.
Once Congress receives notice of a final rule promulgated by an agency, members of Congress have 60 days of continuous session to introduce a special joint resolution of disapproval of the rule. Practically, this means that the 117th Congress could take aim at any final rules submitted to Congress sometime in May 2020. Once that joint resolution is introduced, the House and Senate need only pass it by simple majority votes, and once signed by the president, the CRA states that the rule “shall not take effect (or continue).”
Before the Trump administration, overturning a rule using the CRA occurred only once; however, in 2017, Congress made aggressive use of the CRA to overturn 16 Obama-era regulations focusing on the environment and energy, labor, education, gun control, reproductive health, telecommunications, and transportation.
Strengths and Weaknesses of Using the CRA
The CRA presents several advantages to the Biden administration. First, and most importantly, enacting a joint disapproval means that the rule will not go into effect or will be retroactively negated. This presents an attractive option for rules that the incoming administration views to be particularly problematic, like loosening methane standards and expanding possible transactions under the Volcker Rule, as explained below.
Second, and relatedly, the CRA provides that a joint resolution of disapproval prevents the agency from issuing another rule that is substantially the same unless Congress authorizes the agency to do so in a later law. While the term “substantially the same” is not defined in the CRA, and courts have not yet given it color, Congress’ use of the CRA could warn future administrations against passing the same regulation.
Third, once a CRA joint resolution reaches the Senate floor, filibustering — assuming it is not abolished — is not allowed, amendments are disallowed, floor debate is limited, and only a simple majority is needed to pass the joint resolution. This leaves little recourse for opponents of joint resolutions to stall the resolution’s passage.
Yet, the CRA presents limitations. First, Congress has limited time to act on a rule and must balance competing priorities in the early days of a new administration; these include new legislation, including a pandemic stimulus effort, and confirming cabinet positions. Second, if the vote fails, the rule goes immediately into force.
Rules Subject to the CRA in 2021
The Trump administration’s use of the CRA could serve as a road map for the Biden administration with respect to which rules to overturn. Senate Democrats — even in the minority — have used the CRA several times since President Donald Trump took office to force Republicans to take difficult votes on Trump-era regulations, including environmental regulations, the approval of certain health care plans, and tax regulations.
Even if Senate Democrats remain in the minority, they are not foreclosed from bringing a CRA joint resolution of disapproval to the floor. In addition, some Republicans may vote in favor of a joint resolution of disapproval of certain Trump-era rules.
Many rules may be on the next Congress’ CRA chopping block, including:
- The S. Environmental Protection Agency‘s regulations rolling back standards to control methane emissions, which, if left in place, would reportedly lead to a significant increase in methane emissions.
- A S. Department of the Treasuryrule loosening obligations that banks must meet to invest in lower income communities under the Community Reinvestment Act. This rule has been almost universally criticized by stakeholders and other agencies.
- A joint rule amending the Volcker Rule to loosen certain investment restrictions on banks and financial companies and to expand permissible transactions.
- A S. Department of Housing and Urban Developmentrule repealing an Obama-era regulation requiring jurisdictions receiving federal housing funds to assess patterns of, and establish plans to, reduce housing discrimination. Trump praised this rescission as “saving our suburbs.” Biden said he would reinstate the rule.
- A S. Department of Health and Human Servicesrule repealing a requirement that health care providers and insurers provide and cover certain treatment for transgender individuals and eliminating anti-discrimination protections against individuals with a history of pregnancy termination.
- A S. Department of Educationrule, which — among other reforms — requires post-secondary institutions to install a “predictable, fair grievance process that provides due process protections to alleged victims and alleged perpetrators of sexual harassment.” Although some civil rights groups are supportive of the rule, Biden has vowed to put a “quick end” to it.
It is worth noting that the 16 rules overturned through the CRA process at the beginning of the Trump administration might limit the Biden’s administration’s ability to regulate in some areas, because of their inability to issue another rule that is substantially the same as any regulation struck down under the CRA.
Administrative Procedure Act Implications on Rule Recession
If a regulation is ineligible for CRA review or the Democrats are unable to take back the Senate, thereby limiting their ability to use the CRA, the Biden administration is likely to use the courts to repeal or delay implementation of Trump-era regulations, and the Administrative Procedure Act, or APA, notice-and-comment process to issue regulations rescinding many Trump-era polices.
Over the past four years, operating under Executive Order No. 13771, the Trump administration has aggressively pursued a “regulatory rollback,” with the president claiming to have “ended this regulatory assault on the American worker.”
However, this “dramatic regulatory relief campaign” was nowhere near the success it was heralded to be, and the administration quickly became mired in a swamp of adverse decisions resulting from their failure to abide by the APA. The Biden administration will likely use the ongoing legal vulnerabilities of Trump-era regulations to its advantage over the next four years.
At a high level, the APA sets out certain hurdles the administration must overcome when engaging in rulemaking, including amending or repealing a rule. Rulemaking under the APA is subject to substantive requirements — that rulemaking is not arbitrary and capricious — and procedural requirements — that rules are subject to a notice-and-comment process. Federal statutes may also require different or additional procedures beyond the APA’s general rulemaking requirements.
It is anticipated that the Biden administration will take advantage of the legal vulnerabilities its predecessor created when crafting regulatory policy agenda. Specifically, there are three aspects of Trump-era regulations that may be ripe for legal challenges:
Failure to Involve Career Officials and Technical Experts in Rule Development
The Trump administration often failed to bring in regulatory experts, leaving their rules void of an adequate record. Generally, the courts have given more deference to agencies when the right policy officials and career employees are involved. Courts also give deference to policy decisions made in technical and complex areas, as well as to the agency’s evaluation of information falling within its technical expertise.
Failure to Establish a Full Record, Especially for Rule Recessions
The Trump administration was almost singularly focused on rule rescission rather than rule development over the past four years; however, the APA also requires that an agency establish a full record for rule rescissions, not just new rules. When rescinding a rule, this standard requires the agency to provide a “reasoned analysis for the change beyond that which may be required when an agency does not act in the first instance.”
To provide a reasoned analysis, the agency must “display awareness that it is changing its position” and must “show that there are good reasons for the new policy.” An agency’s “failure adequately to consider a relevant and significant aspect of a problem may render its rulemaking arbitrary and capricious.”
If notice and comment results in serious comments about the downsides of rescission, the agency should make sure to address those points. The Biden administration is likely to try and take advantage of sloppy records for Trump-era rule recessions early on in the administration.
This should also serve as a warning to the incoming Biden administration — before they can rescind any Trump-era regulation, they need to ensure that full records and reasoned analyses are developed during a robust notice-and-comment period. This will mean the rollback of Trump-era policies will take more time, but it is much more likely to stand up to judicial scrutiny.
Use of Contrived Rationales for Regulatory Changes
The Trump administration’s desire to rescind rules as fast as possible sometimes led it to create contorted rationales to justify regulatory change; however, courts take accountability seriously when agencies offer reasons behind a regulatory change.
For example, in U.S. Department of Commerce v. New York, the U.S. Supreme Court rejected the Trump administration’s explanation for reinstating a citizenship question to the census, calling the stated reason “contrived” and requiring that officials “offer genuine justifications for important decisions.”
Courts understand that agencies often make and implement policy-based decisions; agencies should own them, but will need facts and data to support rescission decisions. The Biden administration will likely try to identify and challenge regulations where the reasoned basis underlying the need for a regulatory change seems week and vulnerable to legal challenge.
The Biden administration will be faced with a tsunami of issues on Jan. 20. We anticipate that a critical area of strategic focus will be to realign the federal regulatory agenda. This will be accomplished through a systemic and organized approach, using all of the tools at the administration’s disposal — executive orders and memoranda, new guidance, the CRA, and proper use of APA procedures to rescind or suspend Trump-era regulations.
Comments are closed