Modernizing Regulatory Review

Background

Impact on Law and Regulatory Framework

Before its revocation, the executive order titled "Modernizing Regulatory Review" had a profound impact on how regulatory reviews were conducted within the federal government. It significantly altered the threshold for what constituted a "significant regulatory action" by raising the economic impact threshold to $200 million from the previous $100 million. This change reshaped the focus of regulatory scrutiny, allowing for a wider pool of regulations to bypass the onerous oversight process, leading to a faster regulatory environment. These modifications facilitated a more dynamic regulatory framework aimed at updating economic assessments in line with GDP changes, thereby allowing for an adaptive regulatory landscape that evolved with economic conditions.

Further, the order had extensive operational implications for federal agencies tasked with developing regulatory agendas. It required agencies to incorporate a more inclusive public participation process that prioritized input from diverse and underserved communities. This directive aimed to democratize regulatory development by encouraging broad-based engagement, which broadened the stakeholder base that influenced policy outcomes. By emphasizing public participation and transparency, agencies were able to design regulations that were more reflective of the diverse perspectives and lived experiences across communities, thus potentially leading to regulations that were more equitable in their impacts.

Social Policy Adjustments

The executive order had a pronounced impact on social policy through its mandate to acknowledge distributive impacts and equity in regulatory analysis. Agencies were instructed to consider the impacts of regulations on different demographic groups, emphasizing equitable outcomes. This emphasis encouraged the development of regulations that proactively addressed systemic inequities, serving as a catalyst for promoting social justice initiatives. As a result, regulatory bodies endeavored to create policies that mitigated adverse impacts on marginalized or underserved populations, thereby fostering inclusivity and fairness in regulatory outcomes.

Reason for Revocation

Context of the Revocation

The revocation of this executive order by President Donald Trump in January 2025 can be seen as a reversion to a more traditional regulatory approach. The Trump administration historically favored deregulation and sought to loosen regulatory reigns on industries to stimulate economic activity. The revocation is consistent with a broader ideological shift towards minimizing government intervention in the economy. This ideological stance prioritizes less stringent regulatory frameworks to promote business flexibility and growth while reducing compliance burdens that are perceived as hindering economic innovation and expansion.

Political and Ideological Shifts

The decision to revoke the executive actions associated with regulatory modernization reflects a political recalibration focused on spurring economic growth. The Trump administration likely saw the inclusivity and equity measures as creating additional layers of complexity and bureaucratic delays in the regulatory process. By eliminating these provisions, the administration aimed to accelerate regulatory approvals and reduce the perceived overreach of federal oversight, thus aligning regulatory practices with a free-market and pro-business philosophy. This marked a pivot back to prioritizing corporate efficiency and traditional economic metrics over broader societal factors like social equity.

Compatibility with Traditional Economic Policies

Historically, Republican administrations, including Trump’s previous tenure, have emphasized policies that stimulate independent enterprise and reduce government-imposed barriers to business operations. The executive order, with its focus on equity and public participation, might have been viewed as at odds with such policies. The revocation forms part of a concerted effort to streamline the regulatory environment, revoking mandates that necessitated extensive review processes. By removing these requirements, the Trump administration signaled its prioritization of business agility and market-driven decision-making over procedural inclusivity.

Winners

Corporate Sector and Business Interests

One of the primary beneficiaries of the executive order's revocation would be the corporate sector, particularly large businesses and industries with significant regulatory obligations. This includes sectors such as oil and gas, pharmaceuticals, and manufacturing, where extensive regulatory reviews can delay projects and increase costs. By revoking provisions that emphasized equity and expanded public participation, these industries likely find themselves with more streamlined regulatory processes that could reduce compliance times and expenses. The elimination of heightened public scrutiny requirements would lower the hurdles in implementing new projects or expanding operations.

Industries with High Regulatory Burdens

Industries traditionally under significant regulatory scrutiny, like fossil fuel companies and automotive manufacturers, are well-positioned to benefit from fewer constraints on their operational and expansion plans. For instance, companies like ExxonMobil and General Motors could experience an increased ability to execute strategic plans with reduced bureaucratic oversight. Such industries often criticize extended regulatory review processes for stalling development projects, and the revocation aligns governmental regulatory policy with their interests by potentially facilitating faster project approvals and more predictable operational landscapes.

Economic and Free-market Advocates

Entities and think tanks advocating for free-market policies and less government intervention are also winners in this scenario. These groups generally support policy measures that prioritize economic freedom and minimal regulatory interference, arguing that they lead to greater innovation and economic growth. The revocation resonates with their ideological principles, reinforcing the belief that market forces, rather than regulatory bodies, should drive economic activity and resource allocation. The rollback is poised to bolster the confidence of such advocates in a governance model that reduces perceived regulatory overreach.

Losers

Underserved Communities

The revocation adversely affects underserved communities that benefited from the more inclusive regulatory processes established by the executive order. By eliminating provisions that required agencies to consider equity and involve these communities in rulemaking, these groups are left with diminished influence over policies that could significantly impact their lives. The loss of structured opportunities for meaningful participation in regulatory development deprives these communities of a critical avenue to voice their concerns and ensure that regulations consider their needs.

Environmental Groups and Advocates for Social Equity

Environmental organizations face setbacks with the removal of the equity and public participation mandates in regulatory analyses. The order encouraged agencies to consider the environmental impacts of regulatory actions, particularly on vulnerable populations disproportionately affected by environmental degradation. Advocacy groups like the Natural Resources Defense Council and the Sierra Club, which had leveraged these provisions to hold agencies accountable to equitable environmental considerations, will find it more challenging to influence policy without established frameworks for inclusive deliberation.

Transparency Advocates

Those advocating for transparency in government processes are likely discontented with the revocation. The original order mandated enhanced disclosure of regulatory meetings and encouraged greater transparency in regulatory processes, which are critical components for maintaining public trust. With these elements revoked, there is a perception of reduced accountability and openness in regulatory decision-making, heightening concerns about potential undue influence by well-resourced entities, thereby reducing public confidence in the integrity of regulatory processes.