08 Feb Trump Sued Over Executive Order to Reduce Regulations

A number of liberal groups filed a lawsuit today to challenge Pres. Trump’s January 30 executive order that for every new regulation an agency must eliminate two old regulations. The lawsuit says it requires agencies to be “arbitrary,” which they would not be allowed to do if true. It also says the order is outside the President’s powers to do. The plaintiffs are seeking an injunction killing the order.

In addition to killing two regulations, the order requires the net cost of a new regulation to be zero after taking into account cost savings from regulations eliminated. Military and national security regulations are exempt from the order. The head of the Office of Management and Budget also is allowed to make exceptions (they should consider an exception for any regulations mandated by statute). In signing the order, the President was surrounded by small business leaders. He said, “We’re cutting regulations massively for small business — and for large business. But they’re different. But for small business, and that’s what this is about today.”

But here’s the thing in the world of small business. Some “regulations” actually make things better. For example, we’ve tried to get the SEC to expand the use of short form registration on Form S-3 to all reporting companies, to significantly enhance the ability of the smallest public companies to raise money. That would reduce regulatory burdens, but to implement it would require a “new regulation.” So I have to say I’m scratching my head a little on this one- I’m 100% supportive of easing business regulation, just not certain this is the right way to do it. UPDATE 2.16.2017 it has now been clarified that Trump’s order does not apply to “independent agencies” including the SEC. So that’s good.