Does the Constitution forbid the President from favoring deregulation?

captureLast week, a lawsuit was filed challenging the President’s recent executive order commanding federal agencies to repeal two regulations for every new one proposed and reducing regulatory costs. The complaint raises a litany of constitutional and statutory claims.

The plaintiffs are Public Citizen, NRDC, and the AFL-CIO, all of whom fear that the order will impair their interests by reducing regulations. They raise separation of powers, Take Care clause, and Administrative Procedure Act claims against the order.

Almost as soon as the complaint was filed, commentators pounced on the obvious deficiencies in the suit. First, the executive order expressly does not apply if the application would be “prohibited by law.” That means the order does not require any of the violations of statutory duties that the complaint asserts could happen and is not invalid on its face (particular applications could be another story, but this complaint doesn’t challenge any). Second, the plaintiffs won’t be able to show standing to bring the suit since their injuries are speculative harms that might occur if the order is implemented in a particular way. In such circumstances, the courts demand that plaintiffs wait until those harms are imminent and certain.

But setting aside the legal deficiencies of this case, the complaint hints at an interesting argument. The Supreme Court recently held in Michigan v. EPA that it is irrational for federal agencies to ignore costs when crafting regulations, unless Congress expressly commands them to. The complaint suggests that it would be similarly irrational to ignore benefits, which the executive order allegedly requires.

In theory, that seems eminently reasonable. I’ve lightly criticized the order for failing to focus on the balance between marginal costs and marginal benefits. But I think it’s an overstatement to say that the executive order requires agencies to ignore benefits.

In practice, an agency attempting to comply with the executive order will consider both costs and benefits. When choosing which regulations to propose and which to repeal, it won’t myopically focus on costs. If it did, it would simply repeal all regulations—since they all have some cost. Instead, the agency will decide which regulations are priorities and which aren’t. The priority regulations will be maintained or expanded. The ones that aren’t will be vulnerable to repeal.

When prioritizing the regulations, what factors will the agency consider? I think it’s obvious that they’ll consider (1) whether a statute compels a regulation or leaves it to the agency’s discretion and (2) the benefits of the regulation. The career staffers who populate the agencies are, by and large, committed to regulation and the values of the agency. In other words, people who work at the Environmental Protection Agency tend to weigh environmental issues more heavily than the average voter and believe that regulation is effective at solving environmental problems.  They’re not likely to change their views as a result of the executive order. So, in complying with it, they’ll seek to minimize the impact on what they see as the most important regulations.

Even if a staffer or political appointee was largely skeptical of regulation, she too would naturally take benefits into account when prioritizing regulations. Repealing a  popular and broadly beneficial regulation for some meager cost savings would undermine the deregulation effort. It would be far wiser to focus on the low-hanging fruit—regulations of marginal benefit that have significantly greater costs.

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