March 7, 2018

Challenge to Trump Administration’s Two-for-One Regulation Executive Order Dismissed For Lack of Standing

Holland & Knight Regulatory Litigation Blog
Rafe Petersen

On Feb. 26, 2018, Judge Randolph D. Ross of the United States District Court for the District of Columbia dismissed a complaint filed by several public interest groups challenging President Donald Trump's Executive Order requiring all agencies to repeal two existing regulations for each new regulation issued. The court held that the Communications Workers of America, the Natural Resources Defense Council Inc. and Public Citizen failed to plausibly allege or otherwise demonstrate that they have standing to sue. The court, however, granted leave to amend the complaint which is due April 2, 2018.

Executive Order 13771 (Reducing Regulation and Controlling Regulatory Costs), is commonly known as "the two-for-one EO" because it directs all agencies to identify two existing regulations to be repealed for each new regulation issued in fiscal year 2017 and thereafter. This is part of the Trump Administration's broad effort to reduce what the president has referred to as "economy-choking" regulations. The EO also requires agencies to offset the private costs of compliance posed by new regulations by eliminating the costs associated with existing regulations, and imposes an annual regulatory cap (set at zero for 2017) on incremental regulatory costs that each agency may introduce. The EO requires agencies to submit suggested cuts to the Office of Management and Budget (OMB), who is then empowered to implement the order. OMB issued interim guidance on Feb. 2, 2017, and followed up with final guidance on April 5, 2017.

See Office of Mgmt. & Budget, Interim Guidance Implementing Section 2 of the Executive Order of Jan. 30, 2017 (2017). This guidance clarifies which regulatory actions the EO applies to as well as how the compliance costs are calculated.

The interest groups filed suit shortly after the EO was signed, alleging that the EO is inconsistent with the Administrative Procedure Act as well as a number of federal laws that require federal agencies to consider statute-specific factors in deciding whether to promulgate or to repeal regulations. The complaint asserted that it is improper to premise a decision on the promulgation of one rule on the repeal of other, unrelated regulations. The complaint also alleges that the EO fails to take into account the benefit of new rules and places arbitrary caps on the alleged costs of new rules. The government immediately moved to dismiss the complaint for lack of standing and for failure to state a claim and fourteen states filed an amicus brief in support of the government

The District Court did not reach the merits of the claims, holding that the plaintiffs lacked standing due to a failure to allege facts sufficient to show that they will be harmed. The court looked at both associational and organizational standing and found both lacking due to lack of suffering an "injury in fact." With regard to associational standing, the court held that plaintiffs:

made no effort—either in their complaint or in the multiple declarations they have submitted—to identify a specific member who has suffered, or who is likely to suffer, an injury in fact due to the Executive Order's effect on the regulatory action.

The court also considered plaintiffs' core assertion that their members will be injured by agencies' decisions to forgo or weaken potential regulatory actions and by the repeal of existing regulations. plaintiffs asserted that the U.S. Environmental Protection Agency was likely to stop seeking new regulations so they can protect existing rules. The court rejected this, finding that "plaintiffs have not alleged or otherwise proffered any facts identifying specific regulatory initiatives that have been, or are likely to be, discarded or weakened as a result of Executive Order 13771."

In addition to the failure to identify specific regulations that have been repealed, or are likely to be repealed, the court did not find persuasive, plaintiffs' assertions that there are rules that will be delayed. Even if this were possible, the court held that the delay would "at most, increase the risk that the identified individuals might someday suffer an injury," which is not concrete. The court noted that the plaintiffs must allege that the regulatory actions they have identified would have been taken in the absence of Executive Order 13771. But, the court rejected several alleged examples (e.g. delay of "rules to curb climate change") offered by plaintiffs, and held that they failed to demonstrate delay or harm to plaintiffs' members.

With regard to organizational standing, plaintiffs argued that the Executive Order is causing them harm because it chills their advocacy activities. The advocacy groups argued that the two-for-one rule is a "tradeoff" that forces plaintiffs to choose between advocating for new regulations, at the cost of potential loss of other beneficial regulations. Thus, they were forced to refrain from advocating for necessary new public protections. In rejecting this argument, the court held that plaintiffs "have neither alleged nor offered any evidence that any of them have, in fact, declined - or are imminently likely to decline - to advocate for a new rule out of fear that the Executive Order would compel the repeal of existing rules." The choice in how to advocate is not "injury in fact." The court also found it compelling that the plaintiffs could only speculate about whether the relevant agency would agree to issue a rule that they advocated for and about which rules might be repealed in response.

Having found a lack of jurisdiction, the court dismissed the complaint with leave to amend. According to the docket, plaintiffs have until April 2, 2018 to amend.

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