White House Issues Executive Order on Regulatory Relief to Support Economic Recovery

On May 19, 2020, President Trump signed the Executive Order “Regulatory Relief to Support Economic Recovery.” The Order seeks “to combat the economic consequences of COVID-19” by directing government agencies to consider deregulation to spur economic growth. Specifically, the Order provides that “[a]gencies should address this economic emergency by rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery.”

The Order includes specific directives to encourage deregulation. For instance, the Order requires agencies “use, to the fullest extent possible and consistent with applicable law” their emergency authorities “to support the economic response to the COVID-19 outbreak.” The Order requires agencies to “identify regulatory standards that may inhibit economic recovery and . . . “consider taking appropriate action . . . to temporarily or permanently rescind, modify, waive, or exempt persons or entities from those requirements, . . . exercising appropriate temporary enforcement discretion or appropriate temporary extensions of time . . .  for the purpose of promoting job creation and economic growth.”

The Order instructs agencies, other than the Department of Justice, to provide regulated entities with “[c]ompliance assistance for regulated entities.” Under this provision, the Order requires agencies to “accelerate procedures” for issuing “a pre-enforcement ruling” regarding “whether proposed conduct in response to the COVID-19 outbreak . . . is consistent with statutes and regulations administered by the agency.”  The Order further encourages agencies “to formulate, and make public, policies of enforcement discretion that . . . decline enforcement against persons and entities that have attempted in reasonable good faith to comply with applicable statutory and regulatory standards.”

The Order requires that agencies “revise their procedures and practices” to “consider the principles of fairness in administrative enforcement.”  The principles advise that the “Government should bear the burden of proof,” “[l]iability should be imposed only for violations of statutes or duly issued regulations, after notice and an opportunity to respond,” and “[a]dministrative enforcement should be free of unfair surprise,” among others.

Finally, the Order mandates that agencies review any regulatory standards “temporarily rescinded, suspended, modified or waived” in response to COVID-19 and “determine which, if any, would promote economic recover if made permanent.”  “The Director of the Office of Management and Budget, in consultation with the Assistant to the President for Domestic Policy and the Assistant to the President for Economic Policy,” will then “monitor compliance with this order” and “ issue memoranda providing guidance for implementing this order, including by setting deadlines for the reviews and reports.”

President Trump’s Order bolsters his prior efforts to promote deregulation. But this effort goes further than prior statements, as it requires that agencies eliminate much of the regulatory “red tape” that was cut, or loosened, as part of the COVID-19 pandemic to stimulate economic growth and improve enforcement measures for individuals and entities. But, at present, it remains unclear how agencies will respond to this Order.

From the individual or entity perspective subject to the agency regulations, the “pre-enforcement rulings” provides a useful structure to test the waters. For example, individuals and entities may have the opportunity to vet their new strategies and operations prior to implementation to ensure compliance and thwart future enforcement actions.

For more information on this Order, please contact Aaron M. Danzig or Kara G. Silverman.