Regulatory Stalemate in the Trump Era

Mainbrace | October 2017 (No.4)

Sean T. Pribyl, Jonathan K. Waldron, and Joan M. Bondareff

In the lead up to the general election, then-candidate Donald Trump often repeated campaign promises to massively cut federal regulations that he viewed as stifling to business growth and killing jobs. True to his word, in his first 200 days of office, President Trump has generally delivered on his promise to stymie new federal regulations, including those impacting the maritime industry. Put simply, the pace of regulatory activity has dropped to historic lows in the first six months of the Trump administration. We analyze here whether this is good or bad for the maritime industry.

Two of President Trump’s initial actions following his inauguration were targeted at deregulation. Specifically, President Trump issued two important directives upon taking office. First, he issued a Presidential Memorandum that imposed a regulatory freeze on all pending regulatory actions and agency policy documents that had not yet gone into effect as of January 20, 2017. Next, President Trump issued Executive  Order (“E.O.”) 13771 of January 30, 2017 that attempted to offset the number and cost of new regulations under a “two-for-one” regulatory scheme requiring executive branch agencies to repeal two rules for every new one issued. Public interest groups have challenged the constitutionality of this order, as we discuss below. Furthermore, in February 2017, President Trump tasked each federal agency to form a Regulatory Reform Task Force to evaluate existing regulations and make recommendations on repealing, replacing, or modifying unnecessary regulations—a task respective agencies have undertaken.

On August 15, 2017, President Trump signed an E.O. with the intention of streamlining the federal environmental infrastructure permitting process. The aim is to make con- struction of infrastructure projects for transportation, water, and other purposes in an environmentally sensitive manner. The order implements a “One Federal Decision” policy for major infrastructure projects with a designated lead federal agency on respective projects. This of course comes as the Trump administration has yet to release a formal infrastructure proposal.

Admittedly, the regulatory process can be complex and time-consuming and may involve months or years of review, public comment, and revision. But, regulations also serve an important function by allowing stakeholders to under- stand the legal conditions under which they may operate. Rulemaking can also serve as a key measurement of how a White House shapes policy. While some business models thrive on reduced regulations, businesses also rely on the certainty of regulations to effectively run their enterprises and on which they can rely for investment. In either case, tracking the regulatory trends is a critical function to operating in the maritime industry, and the current administration is no exception.

Congressional Review Act Repeals Obama-Era Regulations
In the early months of his presidency, President Trump relied on the Congressional Review Act (“CRA”) to repeal 14 rules that former President Obama had finalized at the end of his term. For example, Congress repealed the Obama regulation banning discharges of mining waste into adjacent waters under the so-called “Stream Protection Rule,” but by three votes narrowly missed repealing the Department of the Interior’s methane waste final rule governing venting, flaring, and leaks of natural gas.

Essentially, the CRA provides expedited procedures for Congress to reject regulatory rules. The CRA authorizes congressional lawmakers for 60 legislative days to undo regulations enacted by the executive branch without the risk of filibuster or the need for hearings and committee votes. Once a regulation has been repealed under the CRA, the CRA forbids agencies from reissuing rules that are substan- tially the same as any rule overturned under the law, unless Congress subsequently passes a new law and reauthorizes the rule. Prior to President Trump, the CRA had only success- fully been used once. On May 11, 2017, the window closed to pursue deregulation quickly under the CRA.

Forecast of New Maritime Industry Regulations
In response to President Trump’s policy directions, federal agencies have been working to implement President Trump’s regulatory mandates as they look for rules to eliminate. This is proving to be a daunting task. In fact, as a collateral effect, agencies are spending an inordinate amount of time performing this work, which is taking away from other duties and responsibilities. To our knowledge, no agency has successfully repealed two regulations in order to create a new one, perhaps because agencies undergo public comment before action is taken, which takes a long time.

The result has been almost a total lack of any significant federal regulation in the first six months since President Trump took office, as agency rulemaking has stalled to an almost total standstill. To illustrate, in the first six months of the Trump administration, the Office of Information and Regulatory Affairs (“OIRA”) reviewed 67 regulatory actions, such as notices, proposals, and final rules. Compare that with the first Obama administration, in which OIRA reviewed 216 actions under the same timeframe. In fact, in its first six months, the Trump administration pulled or suspended more than 800 regulations, including those related to “Claims Procedures Under the Oil Pollution Act of 1990” and “Tank Vessel Response Plans for Hazardous Substances.” This included 19 regulations with an economic impact of $100 million or more.

Even though President Trump pushed for the “two-for-one” regulatory action as a means to remove outdated rules, his decision may be creating barriers to new, and potentially beneficial, regulations. Also, public interest groups filed a complaint against President Trump challenging the “two-for-one” rule, claiming that it is unconstitutional. The case is Public Citizen Inc. et al. v. Donald Trump et al., case number 1:17-cv-00253, in the U.S. District Court for the District of Columbia. We are closely monitoring the outcome.

OIRA, under its new director, former George Mason associ- ate law professor Neomi Rao, is the principal office that will decide the fate of new agency regulations. Following is a preview of agency regulatory action items.

Maritime Agency Initiatives
Several maritime and environmental agencies released their respective semiannual regulatory agendas that indicate the summary of current and projected significant rulemakings, existing regulations, and completed agency actions. Significant regulatory actions are defined as “those that have an annual effect on the economy of $100 million or more, or adversely affect in a material way the econ- omy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities.”

U.S. COAST GUARD

Among its semi-annual regulatory agenda, the Coast Guard included the following proposed rules (assuming the agency can overcome the “two-for-one” hurdle): a proposal for seafarers’ access to maritime facilities; a proposal regarding the numbering of undocumented barges; continuation of a longstanding effort to revise the Coast Guard’s Outer Continental Shelf regulations; and a proposal for the implementation of 2010 and 2012 legislation regarding commercial fishing vessels. At least two federal advisory committees, the National Maritime Security Advisory Committee (“NMSAC”) and Navigation Safety Advisory Committee (“NAVSAC”), have already begun work to provide input to the Coast Guard in support of its regulatory reform effort. Given the amount of time and resources the Coast Guard is dedicating to comply with the White House’s regulatory policies, the maritime industry should likely expect that in the near-term the Coast Guard will continue to operate under current or reduced regulations as opposed to any newly developed regulations.

CUSTOMS AND BORDER PROTECTION (“CBP”)

CBP’s semi-annual regulatory agenda includes limited examples of significant regulatory activity beyond a proposal regarding importer security filing and additional carrier requirements. Notable, though, is what’s not included in the CBP version: any action on interpreting the Jones Act for oil and gas activities on the Outer Continental Shelf. On May 10, 2017, CBP withdrew a controversial proposal that would have upended decades of precedence in the offshore oil and gas industry. Announced in the final days of the Obama administration, the proposal would have done away with decades of exemptions by CBP that allowed international maritime companies and their crews to perform work in the Gulf and not be subject to the restrictions of the Jones Act. These companies are now urging CBP to undertake a rulemaking to eliminate the uncertainty of the proposed and final CBP notices.

MARITIME ADMINISTRATION (“MARAD”)

MARAD reported no significant rules, although MARAD con- tinues to develop several rules, such as those related to the Marine Highway Corridor Expansion, American Fisheries Act, and a subchapter update to the National Shipping Authority Regulations.

Also, the Maritime Security Program Extension rulemak- ing would implement the requirements of the 2013 National Defense Authorization Act (“NDAA”). According to OIRA, the NDAA: “(1) extended the sunset date of the Maritime Security Program (“MSP”) to September 30, 2025; (2) directed MARAD to offer to extend existing MSP operating agreements to current MSP participants before an open competition; (3) authorized periodic stipend increases; and, (4) prioritized awarding of new MSP contracts according to Department of Defense priorities.” This proposed action would bring the MSP up-to-date by modernizing the current implementing regulations. MARAD is also seeking public comments on Title XI Obligation Guarantees under 46 CFR  Part 298. The information to be collected will be used to evaluate an applicant’s project and capabilities, make the required determinations, and administer any agreements executed upon approval of loan guarantees.

We wonder what existing MARAD rules the new adminis- trator, Retired Navy Rear Admiral Mark Buzby, will repeal in order to issue the new regulations at no additional cost? In other words, whether MARAD has to repeal two existing regulations to implement the NDAA amendments remains to be seen.

ENVIRONMENTAL PROTECTION AGENCY (“EPA”)

In February, President Trump directed EPA Administrator Scott Pruitt to review the definition of “Waters of the United States” through the rulemaking process, a step viewed as moving towards complete removal of the rule. The “Waters of the United States” rule is an Obama-era regulation that allowed the EPA to extend its authority over small bodies of water, such as streams and wetlands. Critics argued the rule would give the federal government excessive authority over bodies of water that were too small and insignificant.

On July 27, 2017, the U.S. Army Corps of Engineers and the EPA proposed amendments to the regulatory defini- tion of “Waters of the United States.” That rulemaking was open for public comment until the extended date of September 27, 2017.

Conclusions
At the 200-day mark, the pace of regulatory activity under the current administration has dipped to historic lows. This was presumably the intent of the “two-for-one” E.O. For some in the maritime industry, this comes as a welcome relief, but for others, the lack of regulations may be viewed as an impediment to investment, innovation, and improvements in public safety. Stakeholders should continue to monitor current regulatory rulemaking impacting the maritime sector and seek opportunities to comment on shaping those regulations.

And now, in the aftermath of powerful hurricanes, the Trump administration has been forced to issue an extended Jones Act waiver. These storms may even force a rethinking of the repeal of executive orders dealing with climate change and flood control in disaster-prone areas. We are continuing to monitor and will report on these developments, and have issued a Jones Act advisory on that waiver extension.

This article was first published in Maritime Executive. Reprinted with permission.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s