11 Key Insights Into Executive Order 13771'S Impact

Executive Order 13771, officially titled "Reducing Regulation and Controlling Regulatory Costs," was signed into effect by President Donald Trump on January 30, 2017. This executive order aimed to reshape the regulatory landscape in the United States by mandating that for every new regulation issued, at least two prior regulations must be identified for elimination, and the cost of the new regulation must be no greater than the cost of the eliminated regulations.

The order was a significant move towards deregulation, and its impact has been far-reaching, affecting various sectors and industries. Here, we delve into 11 key insights that highlight the order's influence and its implications.

1. Regulatory Rollback and Industry Response

One of the most immediate impacts of Executive Order 13771 was the acceleration of regulatory rollback across multiple sectors. Industries that were heavily regulated, such as the energy sector, saw a significant reduction in the number of rules and regulations governing their operations. This led to a more lenient operating environment, with fewer restrictions on activities like drilling and fracking.

However, the industry response was mixed. While some businesses celebrated the reduced regulatory burden, others expressed concerns about the potential negative environmental and social impacts of deregulation. The order's focus on cost-benefit analysis favored industries with high compliance costs, potentially neglecting the broader societal benefits of certain regulations.

Environmental Regulations: A Case Study

The energy sector, in particular, saw a significant reduction in environmental regulations. For instance, the repeal of the Clean Power Plan, which aimed to reduce carbon emissions from power plants, was a direct result of the order’s emphasis on cost-cutting. This deregulation strategy has been a point of contention, with critics arguing that it could lead to increased pollution and a slower transition to cleaner energy sources.

2. Shifting the Regulatory Balance

Executive Order 13771 represented a fundamental shift in the balance of power between the regulatory agencies and the industries they oversee. By mandating a net reduction in regulations, the order effectively weakened the regulatory authorities’ ability to enforce rules and protect the public interest.

This shift in power dynamics has had a profound impact on the regulatory process. Agencies now face increased pressure to identify regulations for elimination, often leading to a prioritization of rules based on their perceived cost rather than their societal benefits. This has resulted in a more industry-friendly regulatory environment, with businesses playing a more influential role in shaping the rules that govern their operations.

The Role of Industry in Regulation

With the order’s emphasis on cost-benefit analysis, industries have become more involved in the regulatory process. They now have a stronger voice in identifying regulations for repeal, often advocating for rules that they perceive as burdensome or costly. This has led to a more collaborative, but potentially less impartial, approach to regulation, with industry interests taking precedence over broader societal concerns.

3. Impact on Environmental Protection

The environmental implications of Executive Order 13771 are profound. With a focus on reducing regulatory costs, the order has led to the rollback of numerous environmental protections, potentially compromising the nation’s air, water, and land quality.

One notable example is the repeal of the Obama-era Waters of the United States (WOTUS) rule, which expanded the Clean Water Act's protections to include smaller bodies of water and wetlands. This repeal has left these water bodies more vulnerable to pollution and degradation, with potential impacts on wildlife and public health.

The Cost of Environmental Deregulation

While the order’s focus on cost-cutting may benefit businesses in the short term, the environmental costs could be significant. Increased pollution and degradation of natural resources could lead to long-term economic and health consequences, affecting not only the environment but also public health and the nation’s economic stability.

4. Regulatory Uncertainty and Market Volatility

The executive order’s impact on regulatory certainty has been a source of concern for many businesses and investors. The rapid and often unpredictable nature of regulatory changes has introduced a level of uncertainty into the market, making it difficult for businesses to plan and invest for the long term.

This uncertainty has been particularly pronounced in industries with significant environmental and social impacts, such as energy and finance. The constant threat of deregulation and the potential for sudden policy shifts has led to a more volatile market environment, with businesses and investors adopting a wait-and-see approach to investment and expansion plans.

The Challenge of Long-Term Planning

With the regulatory landscape in a constant state of flux, businesses face challenges in developing long-term strategies. The lack of regulatory certainty makes it difficult to assess the true cost of doing business and plan for future growth. This has led to a more cautious approach to investment, with businesses prioritizing short-term gains over long-term sustainability.

5. Impact on Public Health and Safety

The order’s emphasis on cost-cutting has raised concerns about its potential impact on public health and safety. With regulations often serving as a safeguard against potential hazards, the reduction in rules could leave the public more vulnerable to risks ranging from environmental pollution to workplace accidents.

For instance, the repeal of the Occupational Safety and Health Administration's (OSHA) silica dust rule, which aimed to protect workers from exposure to silica dust, has been a cause for concern. Silica dust exposure has been linked to serious health issues, including lung cancer and kidney disease, and the repeal of this rule could potentially put millions of workers at risk.

The Human Cost of Deregulation

The focus on regulatory cost-cutting may lead to short-term economic gains, but the potential human cost cannot be ignored. The rollback of public health and safety regulations could result in increased workplace injuries, environmental illnesses, and other health-related issues, impacting not only workers but also their families and communities.

6. Strengthening of Executive Power

Executive Order 13771 represents a significant strengthening of executive power over the regulatory process. By mandating a net reduction in regulations, the order gives the executive branch significant control over the rulemaking process, potentially limiting the influence of other branches of government and the public.

This concentration of power has led to concerns about the potential for regulatory capture, where special interest groups and industries exert undue influence over the regulatory process. With the executive branch holding the power to decide which regulations to repeal, there is a risk that the public interest may be overlooked in favor of industry interests.

The Risks of Regulatory Capture

The order’s emphasis on cost-cutting and the repeal of regulations could lead to a regulatory environment that favors certain industries over others. This could result in a less competitive market, with smaller businesses and startups struggling to navigate a regulatory landscape that is increasingly influenced by established industry players.

7. Impact on International Relations

The executive order’s focus on deregulation has not been without international repercussions. The United States’ reputation as a leader in environmental protection and sustainable development has been called into question, with some countries expressing concern over the potential environmental and social impacts of the order’s policies.

For instance, the decision to withdraw from the Paris Climate Agreement, which was made in conjunction with the order's emphasis on deregulation, has led to a loss of trust in the United States' commitment to global environmental efforts. This has the potential to impact international relations and the nation's standing on the global stage.

The Global Implications of Deregulation

The United States’ regulatory decisions have global implications, especially in the context of environmental protection and climate change. The rollback of environmental regulations and the withdrawal from international agreements could hinder global efforts to combat climate change and protect the environment, potentially leading to increased tensions and a loss of influence in international forums.

8. The Role of the Judiciary

The executive order’s impact has not gone uncontested, with several legal challenges being brought against the order and its subsequent regulatory actions. The judiciary has played a critical role in checking the executive’s power, particularly in cases where the order’s implementation has been seen to violate existing laws or constitutional principles.

For instance, the Supreme Court's decision to block the Trump administration's attempt to add a citizenship question to the 2020 Census was a significant victory for those opposing the order's policies. This decision highlighted the judiciary's role in maintaining the balance of power and ensuring that the executive branch does not exceed its authority.

Judicial Checks and Balances

The judiciary’s role in overseeing the executive’s regulatory actions is crucial for maintaining the rule of law and protecting the public interest. The courts’ ability to review and, if necessary, strike down regulations that are deemed unconstitutional or illegal serves as a vital check on the executive’s power, ensuring that the regulatory process remains fair and impartial.

9. Impact on Small Businesses

While the order’s focus on deregulation may benefit large corporations, its impact on small businesses is less clear-cut. On the one hand, reduced regulations could potentially lower compliance costs for small businesses, making it easier for them to operate and compete in the market.

However, the order's emphasis on cost-cutting may also lead to a regulatory environment that favors large businesses over smaller ones. This could create a barrier to entry for new businesses and limit competition, potentially stifling innovation and entrepreneurship.

The Double-Edged Sword of Deregulation

The deregulation brought about by Executive Order 13771 could have both positive and negative impacts on small businesses. While reduced regulations may lower compliance costs, the potential for a less competitive market and increased industry influence over regulation could hinder small businesses’ ability to thrive and innovate.

10. Long-Term Sustainability Concerns

The order’s focus on short-term cost-cutting has raised concerns about its potential impact on long-term sustainability. With a significant reduction in regulations, there is a risk that the nation may face environmental, social, and economic challenges in the future, potentially requiring costly interventions to address these issues.

For instance, the rollback of environmental regulations could lead to increased pollution and degradation of natural resources, which may require significant investments to mitigate in the future. Similarly, the reduction in public health and safety regulations could result in increased healthcare costs and social welfare expenses.

The Cost of Short-Term Thinking

While the order’s focus on cost-cutting may provide short-term economic benefits, the potential long-term costs cannot be ignored. The deregulation strategy could lead to a range of social, environmental, and economic challenges, which may require significant resources to address in the future. This raises questions about the sustainability and long-term viability of the order’s policies.

11. The Future of Regulation

As the regulatory landscape continues to evolve, the impact of Executive Order 13771 will be a subject of ongoing debate and analysis. The order’s emphasis on cost-benefit analysis and deregulation has set a precedent that is likely to influence future regulatory decisions, shaping the relationship between government, industry, and the public for years to come.

The future of regulation will be shaped by a complex interplay of economic, environmental, and social factors. While the order's policies may provide short-term benefits for certain industries, the long-term implications for the nation's sustainability, public health, and international standing will be critical considerations in the years ahead.

Navigating the Regulatory Landscape

For businesses and investors, the evolving regulatory landscape presents both challenges and opportunities. The ability to navigate this landscape, understanding the potential impacts of regulatory changes on their operations and investments, will be crucial for long-term success. This will require a proactive approach to regulatory compliance and a deep understanding of the political and social factors that influence the regulatory process.