Reince Priebus points.

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The Fine Print in Trump's Regulation Memo

Cass R. Sunstein is a Bloomberg View columnist. He is the author of “The World According to Star Wars” and a co-author of “Nudge: Improving Decisions About Health, Wealth and Happiness.”
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On his first day in office, President Donald Trump issued a “regulatory freeze,” in the form of a memorandum, signed by chief of staff Reince Priebus, that appeared to halt new regulations in their tracks.

Specifically, the memorandum says that (1) no new regulation can be published unless a Trump appointee personally approves of it; (2) Obama-era regulations that have not yet been published in the Federal Register should be immediately withdrawn; and (3) the effective date of Obama regulations that have been published but not yet taken effect should be postponed for 60 days, to allow the new administration to review questions of fact, law and policy.

From the political right, there was loud applause, accompanied by cries of alarm from the left. Both sides quieted down after observers of the regulatory process noticed that this is a routine step whenever administrations change -- and indeed that Priebus’s memorandum essentially tracked what Rahm Emanuel did on Jan. 20, 2009.

No, it’s not plagiarism -- just borrowing a sensible and time-honored practice. Any new administration wants to make sure that its own appointees sign off on regulations, and also to reassess the unfinalized work of its predecessor.

But the Priebus memorandum does make two noteworthy changes, which means that it is a more muscular document than Emanuel’s. The changes are a bit technical, but please bear with me; they matter.

The first is that where Emanuel merely asked agencies to “consider” postponing the effective date of regulations that have been published but not yet taken effect, Priebus eliminated their discretion -- and flatly directed them to postpone those regulations.

That’s a real difference. The Obama administration thought that some of Bush’s final regulations might be just fine, and so it called for case-by-case judgments, from Obama’s agency heads, about whether to postpone them. Trump’s White House is taking a more aggressive approach.

The second change is more important, both for its own sake and for what it signals about the future. Where Emanuel only targeted “regulations,” Priebus included “guidance documents” as well. This suggests that the Trump administration may soon give the business community something that it has wanted for a long time.

Agencies issue a lot of guidance documents. Unlike regulations, they lack the force of law. They are merely advisory -- but people pay a lot of attention to them.

For example, the Environmental Protection Agency might tell companies that if they do not take certain steps, it will consider them to be in violation of the Clean Air Act. Or the Food and Drug Administration might tell the food industry how it wants it to comply with regulations requiring disclosure of information about serving sizes or about added sugars. Or the Department of Education might inform universities that they should respond to allegations of sexual harassment by putting specific procedures in place.

In theory, people are free to ignore guidance documents. If a company violates mere guidance, it cannot be punished. But in practice, any such violation is risky, because it will trigger the agency’s attention, and officials might decide to take action. It’s usually prudent just to comply.

For that reason, members of the business community and others subject to regulation have pleaded with both Republican and Democratic administrations to impose much greater checks on agencies before they issue guidance documents. Such checks might include White House review (through the Office of Information and Regulatory Affairs) and a suitable period for public comment.

These pleas should be heeded. Guidance documents are sometimes ill-considered -- and they can wreak havoc. Though the Obama administration made major strides toward disciplining the flow of significant guidance documents, the Trump administration should impose more formal safeguards before they are issued (including an opportunity for public comment). The Priebus memorandum is a strong initial signal that the White House is aware of the problem.

In the scheme of things, the Emanuel memorandum turned out not to be a big deal. It simply allowed the incoming administration a chance to reassess regulations issued in the final months of the Bush administration.

The Priebus memorandum doesn’t really create a regulatory freeze. But its greater muscularity, taken together with the president’s own rhetoric, suggests that something in that vicinity might be coming soon -- and that guidance documents might well be swept up in the mix.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Cass R Sunstein at csunstein1@bloomberg.net

To contact the editor responsible for this story:
Katy Roberts at kroberts29@bloomberg.net