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Rulemaking

Rulemaking is the quasi-legislative process through which federal administrative agencies in the United States formulate, amend, or repeal regulations—known as rules—that implement and interpret statutes delegated by Congress, carrying the binding force of law.^[1]^[2] These rules address detailed policy implementation in areas such as environmental protection, public health, and economic regulation, filling gaps left by broad legislative directives.^[3]^[4] The Administrative Procedure Act (APA) of 1946 establishes the core framework for rulemaking, requiring agencies to publish notices of proposed rules in the Federal Register, solicit and respond to public comments, and justify final rules based on the administrative record.^[5]^[6] Informal notice-and-comment rulemaking under APA § 553 predominates, promoting transparency while allowing agencies flexibility, whereas formal rulemaking—entailing trial-like hearings—is rare and limited to statutes explicitly mandating it.^[7]^[8] This process enables agencies to adapt regulations to empirical evidence and changing conditions, but it has fueled concerns over unaccountable bureaucratic power, as agencies wield significant discretion in interpreting ambiguous laws.^[4] Rulemaking's expansion alongside the administrative state has achieved regulatory achievements like standardized safety standards and environmental safeguards, yet it remains contentious due to instances of regulatory overreach, inadequate cost-benefit analysis, and challenges to congressional delegation of lawmaking authority.^[3]^[9] Recent judicial developments, including the 2024 Supreme Court decision in Loper Bright Enterprises v. Raimondo overturning Chevron deference, have curtailed agency interpretive latitude, emphasizing that courts must independently interpret statutes rather than defer to agency views, thereby reasserting separation-of-powers principles.^[4]

Historical Foundations

Pre-APA Origins

Administrative rulemaking in the United States originated in ad hoc executive practices during the 19th and early 20th centuries, often lacking explicit congressional delegation or standardized procedures, which strained constitutional separation of powers principles requiring legislative authority to reside primarily in Congress.^[10] Early examples included Treasury Department circulars interpreting customs and fiscal statutes, such as those issued under Secretary Alexander Hamilton in the 1790s to enforce tariff collections, and later regulations on internal revenue and bonds without formal legislative standards.^[11] The Interstate Commerce Commission (ICC), established by the Interstate Commerce Act of 1887, exemplified agency-like rulemaking through binding orders setting railroad rates and practices, frequently developed informally without clear statutory guidelines on process or public input, reflecting a shift toward delegated regulatory authority amid industrialization.^[10]^[12] These practices drew partial influence from English common law traditions, including rudimentary notice elements transplanted to American administration. English procedures under the Rules Publication Act of 1893 mandated publication of proposed rules and consultation with affected parties, which informed U.S. efforts like the Federal Register Act of 1935 requiring finalized regulations' publication, though pre-APA consultations remained inconsistent and non-binding.^[13] The 1932 Donoughmore Committee report in England advocated standardized delegated legislation processes, influencing U.S. Attorney General's Committee recommendations in 1941 for informal notice of proposed rules, yet American adoption emphasized executive discretion over parliamentary oversight due to structural differences.^[13] Initial tensions arose as courts invoked the nondelegation doctrine to curb perceived executive overreaches, underscoring deviations from first principles where rulemaking blurred legislative and executive functions. In Field v. Clark (1892), the Supreme Court held Congress could not delegate core legislative power absent an "intelligible principle," though J.W. Hampton, Jr. & Co. v. United States (1928) permitted guided delegations.^[10] By the 1930s, amid New Deal expansions, rulings like Panama Refining Co. v. Ryan (1935) invalidated Section 9(c) of the National Industrial Recovery Act for delegating unchecked authority to the President to prohibit oil transport, lacking legislative standards.^[14] Similarly, A.L.A. Schechter Poultry Corp. v. United States (1935) struck down the Act's broad rulemaking delegation to industry codes, deeming it an unconstitutional transfer of lawmaking power without sufficient congressional constraints.^[15] These decisions highlighted systemic risks in unstructured pre-APA practices, prompting later codification efforts while affirming judicial limits on agency autonomy.^[10]

New Deal Expansion

The New Deal era, initiated by President Franklin D. Roosevelt in response to the Great Depression, witnessed a profound expansion of federal administrative agencies empowered with extensive rulemaking authority to implement economic recovery measures.^[16] The National Industrial Recovery Act (NIRA), enacted on June 16, 1933, established the National Recovery Administration (NRA), which facilitated the creation of industry-specific codes of fair competition regulating wages, hours, prices, and trade practices.^[17] Over 500 such codes were developed and approved by the President, covering hundreds of industries and effectively functioning as binding regulations without direct congressional oversight for each provision.^[18] This mechanism exemplified crisis-driven delegations, where Congress granted the executive branch sweeping discretion to address economic distress through administrative edicts rather than deliberate legislation. Parallel developments included the Securities Exchange Act of 1934, which created the Securities and Exchange Commission (SEC) with rulemaking powers to oversee securities markets, including the authority to promulgate rules on registration, trading, and disclosure requirements.^[16] Similarly, agencies like the Agricultural Adjustment Administration (AAA), formed under the Agricultural Adjustment Act of 1933, issued regulations controlling crop production and prices to stabilize farming sectors.^[19] These entities operated with minimal procedural constraints, enabling rapid issuance of rules amid political demands for immediate intervention, as legislative processes proved too sluggish for the scale of the economic emergency. The resulting volume of administrative output surged, transforming rulemaking from a supplementary tool—limited to dozens of rules annually from pre-existing agencies like the Interstate Commerce Commission—into a primary governance instrument, with the NRA alone generating regulatory frameworks for 557 industries.^[18] This unchecked delegation provoked constitutional challenges, culminating in A.L.A. Schechter Poultry Corp. v. United States (295 U.S. 495, 1935), where the Supreme Court unanimously struck down the NIRA's core provisions as an invalid transfer of legislative power to the executive, absent an "intelligible principle" to guide discretion.^[15] The ruling highlighted the nondelegation doctrine's limits, underscoring how broad grants enabled unelected administrators to exercise policy-making functions traditionally reserved for elected representatives. Driven by the Depression's imperatives—marked by widespread bank failures and industrial collapse—these expansions prioritized expediency over separation of powers, fostering a precedent for administrative dominance that eroded congressional deliberation and ignited enduring debates over the legitimacy of bureaucratic rule-making.^[10]

Enactment of the Administrative Procedure Act

The Administrative Procedure Act (APA) emerged from prolonged congressional efforts to standardize federal agency procedures amid concerns over unchecked administrative power during the New Deal era. In 1940, the Walter-Logan Bill, which sought to impose judicial-like safeguards on agency actions including rulemaking and adjudication, passed both houses of Congress but was vetoed by President Franklin D. Roosevelt on December 18, 1940, who argued it would unduly hamper agency efficiency and invite excessive litigation.^[20]^[21] Following this, the Attorney General's Committee on Administrative Procedure issued a 1941 report recommending procedural reforms without curtailing substantive agency authority, influencing subsequent drafts.^[22] By 1946, wartime exigencies had subsided, enabling a bipartisan compromise that balanced demands for accountability with preservation of agency functions. The Senate approved the bill on February 19, 1946, and the House on May 24, 1946, after reconciling differences; President Harry S. Truman signed it into law on June 11, 1946, as Pub. L. No. 79-404, 60 Stat. 237.^[23]^[24] The APA mandated publication of rules in the Federal Register and incorporated basic due process elements, such as notice and opportunity for hearing, to promote transparency and public participation without reverting to pre-New Deal constraints.^[25] Central to the APA's rulemaking framework, section 553 established procedures for informal rulemaking—requiring general notice of proposed rules in the Federal Register, followed by an opportunity for interested parties to comment—while allowing formal rulemaking (with trial-like hearings under sections 556 and 557) only when statutes expressly required it.^[25] Section 554 similarly standardized adjudications, distinguishing formal proceedings subject to cross-examination from informal ones. This structure aimed to enhance efficiency over ad hoc agency practices while ensuring accountability, reflecting congressional intent to discipline procedures amid agencies' expanded post-New Deal roles.^[26] In the years immediately following enactment, the APA contributed to a decline in formal hearings, which had previously dominated agency processes, as informal notice-and-comment rulemaking became the predominant mode for substantive rules.^[27] This shift facilitated a marked increase in rulemaking activity, with agencies issuing thousands of rules through streamlined procedures by the 1950s, embedding notice-and-comment as the core mechanism for regulatory development and solidifying agencies' lawmaking capacity under procedural guardrails.^[28]

Legal Framework

Core Provisions of the APA

The Administrative Procedure Act (APA) establishes foundational requirements for informal rulemaking in 5 U.S.C. § 553, mandating public notice, opportunity for participation, and reasoned adoption of rules to ensure agency actions are transparent and subject to external evaluation of their alignment with delegated authority.^[25] These procedures apply unless statutes preclude or modify them, serving as the default framework for agencies to issue statements implementing law or policy.^[25] By requiring publication and input mechanisms, the provisions counter potential overreach by grounding decisions in disclosed rationales and public-contributed data, prioritizing verifiable justification over internal agency preferences.^[25] Central to these provisions is the definition of a "rule" in 5 U.S.C. § 551(4) as "the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency."^[29] This scope emphasizes prospective, broadly applicable directives, distinguishing rulemaking from adjudication under § 551(7), which involves agency processes for specific case resolutions rather than general policy formulation.^[29] The distinction ensures rulemaking targets systemic effects, enabling assessment of whether agency interpretations exceed statutory limits through empirical review of their bases.^[29] Under § 553(b), agencies must publish general notice of proposed rulemaking in the Federal Register, specifying the legal authority, time and place for submissions, and either the proposed rule's terms or substance, or a description of subjects and issues involved—exceptions apply only for rules naming affected persons with personal service or actual notice.^[25] This notice requirement facilitates prior public awareness, allowing stakeholders to gather and present data challenging unsubstantiated agency assumptions.^[25] Section 553(c) mandates an opportunity for "interested persons" to participate via written data, views, or arguments, with agencies typically setting comment periods of 30 to 60 days to balance thorough input against efficiency.^[5]^[6] Upon finalizing the rule, agencies must incorporate a "concise general statement of [its] basis and purpose," reflecting consideration of submitted materials, which promotes decisions traceable to record evidence rather than discretionary fiat.^[25] Finally, § 553(d) requires substantive rules to become effective no less than 30 days after Federal Register publication of the final version, providing compliance lead time and opportunity for petitions under § 553(e) to issue, amend, or repeal rules—shorter periods are permitted for good cause, interpretive rules, or procedural matters.^[25] These timing and petition elements reinforce causal accountability, as delayed implementation allows testing of rules against real-world data before binding effects.^[25] The Regulatory Flexibility Act of 1980 requires federal agencies to evaluate the potential impacts of proposed and final rules on small entities, defined to include small businesses, small governmental jurisdictions, and certain nonprofit organizations, and to consider alternatives that minimize such burdens when developing regulations.^[30] Enacted on September 19, 1980, the Act mandates preparation of initial and final regulatory flexibility analyses for rules likely to have significant economic effects on a substantial number of small entities, including descriptions of the rule's effects, significant alternatives considered, and steps to minimize burdens.^[31] The Small Business Regulatory Enforcement Fairness Act of 1996 amended the RFA to expand judicial review, allowing small entities to challenge agency compliance with flexibility requirements in court and permitting retroactive review of certain rules.^[32] The Paperwork Reduction Act of 1980 establishes procedures to minimize the federal paperwork burden on the public by requiring agencies to obtain approval from the Office of Information and Regulatory Affairs (OIRA) for information collections associated with rulemaking, such as reporting requirements in regulations.^[33] Signed into law on December 4, 1980, the Act directs agencies to demonstrate that proposed collections are necessary for proper performance of functions and do not duplicate existing requirements, while setting goals for reducing overall information collection burdens.^[34] Through OIRA's centralized oversight, the PRA integrates paperwork controls into the rulemaking process to curb excessive demands on regulated parties.^[35] The Unfunded Mandates Reform Act of 1995 requires agencies to assess the effects of proposed rules that may impose enforceable duties exceeding specified thresholds—$100 million for private sector impacts or $30 million (adjusted for inflation) for intergovernmental mandates—on state, local, tribal governments, or the private sector, including qualitative and quantitative cost analyses.^[36] Enacted on March 22, 1995, UMRA aims to promote informed decisionmaking by mandating agencies to identify less burdensome alternatives and consult with affected governments, though exemptions apply for certain rules like those under constitutional authority or emergencies.^[37] Empirical assessments under UMRA have highlighted substantial intergovernmental costs from federal regulations, contributing to broader efforts to quantify and mitigate cumulative burdens estimated in the trillions of dollars over decades from ongoing regulatory expansions.^[38] The Congressional Review Act of 1996, enacted as part of the Small Business Regulatory Enforcement Fairness Act, enables Congress to review and disapprove agency rules through expedited joint resolutions, subjecting them to a "lookback" period for rules submitted within 60 legislative days before a session's end.^[39] Signed into law on March 29, 1996, the CRA has facilitated the overturning of 20 rules since enactment, with 16 such disapprovals occurring during the 115th Congress (2017-2018) targeting late-term Obama administration regulations, including examples like the Department of Education's borrower defense rule and the Environmental Protection Agency's Waters of the United States rule.^[39]^[40] These mechanisms provide legislative oversight to counteract agency rulemaking but have proven insufficient to reverse the net growth in federal regulatory volume.^[41]

Rulemaking Procedures

Notice-and-Comment Process

The notice-and-comment process, governed by Section 553 of the Administrative Procedure Act (APA), constitutes the primary mechanism for informal rulemaking by federal agencies. An agency initiates the sequence by publishing a Notice of Proposed Rulemaking (NPRM) in the Federal Register, which must include the text or substance of the proposed rule, the legal authority under which it is proposed, and a description of the time, place, and method for submitting public comments, typically affording at least 30 days for responses.^[6]^[42] Public participation occurs primarily through written submissions via platforms like Regulations.gov, though agencies may hold hearings in select cases; comment periods for major rules often extend to 60 days or longer to accommodate complex issues.^[3] Following the close of comments, the agency reviews submissions, incorporates relevant input into its analysis, and publishes a final rule in the Federal Register, accompanied by a "concise general statement of ... basis and purpose" explaining the rationale, any changes from the proposal, and responses to significant comments.^[6] This finalization must occur at least 30 days before the rule's effective date, allowing time for preparation, though economically significant rules reviewed by the Office of Information and Regulatory Affairs (OIRA) require 60 days.^[42] Empirical data reveal substantial volumes of input for high-stakes rules, yet processing demands extend timelines significantly. For instance, the Environmental Protection Agency (EPA) received over 100,000 public comments on its proposed determination regarding the appropriateness of model year 2022+ standards for medium- and heavy-duty vehicles, reflecting intense stakeholder engagement on emissions regulations.^[43] Similarly, the EPA's Clean Water Rule drew more than 100,000 letters supporting protections for waters, underscoring mass mobilization by environmental groups.^[44] Agencies must address substantive comments in the final rule's basis statement, but studies indicate selective responsiveness, prioritizing detailed, expert analyses over voluminous form-letter campaigns, which agencies often dismiss as lacking independent value.^[45] Overall, the interval from NPRM publication to final rule for major regulations frequently exceeds one year and can stretch to multiple years due to comment review, revisions, and interagency coordination, contributing to protracted regulatory development.^[46]^[47] Despite its aim to incorporate diverse perspectives and mitigate agency overreach, the process exhibits inefficiencies rooted in resource asymmetries and institutional incentives. Organized interest groups, including industry associations and advocacy organizations, dominate submissions with sophisticated, data-driven arguments, while individual citizens contribute minimally, leading to outcomes skewed toward well-resourced participants.^[48] Empirical analyses confirm that agencies adjust rules in response to comments aligned with their policy preferences or from influential stakeholders, enabling regulatory capture where concentrated interests—such as regulated industries or ideological lobbies—exert disproportionate sway through targeted advocacy.^[49]^[50] This dynamic often prolongs rules favoring expansion of agency authority, as oppositional comments from deregulation advocates trigger extended deliberations, whereas supportive inputs face fewer hurdles; longitudinal reviews highlight how such delays hinder timely repeal or simplification of outdated regulations, perpetuating administrative bloat.^[51]^[47]

Formal and Hybrid Rulemaking

Formal rulemaking under the Administrative Procedure Act (APA) applies when a statute requires a rule to be made "on the record after opportunity for an agency hearing," as specified in 5 U.S.C. § 553(c).^[25] In such cases, the procedures outlined in §§ 556 and 557 govern, mandating trial-like elements including the appointment of an administrative law judge to preside, administration of oaths, receipt of relevant evidence, and rights to cross-examination and rebuttal by interested parties.^[52] These provisions ensure a formal evidentiary record, with decisions based solely on that record, contrasting sharply with the more flexible informal notice-and-comment process.^[27] The Supreme Court's decision in United States v. Florida East Coast Ry. Co. (1973) clarified that statutory language requiring a mere "hearing" does not trigger these formal requirements unless explicitly "on the record," limiting its application to specific statutes predating this interpretation.^[53] Hybrid rulemaking arises from statutes that impose procedures beyond standard informal rulemaking under § 553 but stop short of full §§ 556-557 formality, often combining notice-and-comment with elements like public hearings, oral presentations, or detailed agency findings.^[27] Examples include the Clean Air Act, which requires public hearings on certain emission standards; the Occupational Safety and Health Act, mandating hearings for health standards; and the Magnuson-Moss Warranty Act for Federal Trade Commission trade rules, which adds cross-examination in limited contexts.^[54] These hybrid processes aim to enhance participation and deliberation without the full adversarial structure of formal rulemaking. Both formal and hybrid approaches are employed sparingly, comprising a small fraction of federal rules due to their procedural intensity; informal notice-and-comment dominates, as Congress and agencies have largely avoided mandating "on the record" requirements in post-1970 statutes to prioritize efficiency.^[27] Critics argue that the burdens of formal and hybrid rulemaking—such as extended timelines for hearings and evidentiary development—impose high resource demands on agencies, often exceeding those of informal processes and discouraging their use in favor of less rigorous alternatives.^[55] This rarity underscores how procedural formality can hinder timely regulation, though proponents contend it promotes accountability by curbing agency discretion.^[56]

Exemptions and Informal Actions

The Administrative Procedure Act permits agencies to dispense with notice-and-comment rulemaking under the "good cause" exemption in 5 U.S.C. § 553(b)(B) when the agency determines that such procedures are "impracticable, unnecessary, or contrary to the public interest," with the finding and a brief statement incorporated into the rule's preamble.^[25] This provision enables rapid agency action in emergencies, such as public health crises, or when prior notice would prove ineffective or counterproductive, as interpreted by courts requiring agencies to demonstrate specific circumstances beyond mere expediency. For instance, the Centers for Disease Control and Prevention invoked good cause in March 2021 to extend a residential eviction moratorium amid the COVID-19 pandemic, citing immediate risks of homelessness and disease spread, though this faced legal challenges alleging inadequate justification and overreach beyond statutory authority.^[57] Presidential directives have encouraged good cause use for deregulatory purposes, as seen in instructions to agencies to leverage the exemption for swift repeal of prior regulations deemed unlawful, facilitating agility in reversing policies without delaying public input until after interim implementation.^[58] Such applications underscore the exemption's role in enabling executive priorities, yet empirical analyses indicate that rules issued via good cause often encounter heightened judicial scrutiny and litigation rates compared to those following full procedures, with courts vacating exemptions lacking robust substantiation.^[59] Separate from good cause, § 553(b)(A) exempts "interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice," allowing agencies to issue guidance documents, policy statements, and interpretive releases without notice and comment.^[25] These non-legislative outputs, which clarify statutory interpretations or outline enforcement priorities, constitute a substantial share of agency activity—empirical studies show agencies exempt roughly 50% of rules from full APA processes via such categories, prioritizing operational flexibility over formal deliberation. While promoting efficiency in routine administration, this informality raises concerns of substantive policymaking disguised as guidance, evading accountability and contributing to inconsistent application across regulated entities.^[60] Courts have invalidated such documents when they function as binding rules without procedural safeguards, highlighting tensions between agency agility and rule-of-law principles.^[61]

Types and Scope of Rules

Legislative versus Interpretive Rules

Legislative rules, also known as substantive rules, possess the force and effect of law and impose binding obligations on the public, deriving their authority from explicit statutory delegations by Congress. These rules must undergo the full notice-and-comment procedures outlined in Section 553 of the Administrative Procedure Act (APA) to ensure public input and congressional oversight.^[62] For instance, under the Clean Air Act, the Environmental Protection Agency (EPA) promulgates National Ambient Air Quality Standards (NAAQS), which establish enforceable limits on pollutants like ozone and particulate matter, directly binding regulated entities such as industrial facilities.^[63] This process reflects Congress's intent to channel agency policymaking through formalized channels, preventing unilateral expansion of authority.^[64] In contrast, interpretive rules serve to clarify or explain an agency's understanding of existing statutes or legislative rules without creating new legal obligations or altering the underlying law.^[65] Exempt from notice-and-comment requirements under APA Section 553(b)(A), these rules advise the public on how the agency construes its mandates but lack independent binding force. A prominent example is the Internal Revenue Service's (IRS) revenue rulings, which apply the Internal Revenue Code to specific factual scenarios, such as interpreting deductions for business expenses, thereby guiding taxpayer compliance without imposing novel requirements.^[66] Courts generally afford interpretive rules less deference than legislative ones, scrutinizing them for fidelity to statutory text rather than treating them as authoritative law.^[67] Agencies frequently blur the distinction by issuing purportedly interpretive rules that exert legislative-like effects, such as de facto mandates enforced through audits, permits, or litigation threats, thereby circumventing APA's procedural safeguards and extending authority beyond congressional delegation.^[64] This practice undermines democratic accountability, as it allows unelected officials to impose policy changes without public notice or legislative approval, prompting judicial challenges where courts reclassify such rules as legislative if they substantively bind the public.^[68] For example, agencies have faced criticism for using guidance documents to set enforceable standards independent of statutes, effectively policymaking under the guise of interpretation and eroding the separation between explanation and law creation intended by the APA.^[69] Such overreach has been documented in cases involving environmental and financial regulations, where interpretive labels mask substantive rulemaking.^[62]

Procedural and Organizational Rules

Under the Administrative Procedure Act (APA), procedural and organizational rules are exempted from the notice-and-comment requirements of informal rulemaking pursuant to 5 U.S.C. § 553(b)(A), which applies to "rules of agency organization, procedure, or practice."^[70] These rules pertain to an agency's internal governance and operational mechanics, including structures for decision-making delegation, formats for administrative hearings, and mechanisms for processing submissions, rather than imposing substantive obligations on regulated entities.^[25] The exemption recognizes that such matters primarily concern agency management, where public input may yield marginal benefits relative to the administrative burden of soliciting it.^[71] Examples include the Federal Communications Commission's (FCC) adjustments to bureau-level procedural changes, such as streamlining internal review processes for filings, which the agency has implemented without prior notice under this provision.^[72] Similarly, agencies may issue orders reassigning authority among offices or prescribing standardized formats for evidentiary submissions in adjudicatory proceedings, often finalizing them directly via publication in the Federal Register.^[73] These measures can affect external parties indirectly—such as by altering filing burdens or access to hearings—yet stakeholders typically lack formal opportunities to comment, distinguishing them from substantive rulemaking. While the exemption enhances operational efficiency by enabling rapid adaptations to administrative needs, it has drawn criticism for reducing accountability and potentially allowing agencies to embed self-interested modifications under the guise of procedure.^[74] Empirical analysis of Federal Register data reveals that agencies invoke statutory exemptions like § 553(b)(A) more frequently amid heightened political scrutiny from the executive branch, indicating strategic circumvention of procedural safeguards to insulate decisions from external review.^[74] This pattern raises concerns about operational biases, as internal rules can favor entrenched interests or agency priorities over broader stakeholder concerns, though courts generally uphold the exemption absent evidence of substantive policy shifts in disguise.^[73]

Implementation and Enforcement

Agency Apparatus

The bureaucratic apparatus executing federal rulemaking comprises a decentralized array of over 220 executive branch agencies delegated authority by Congress to issue regulations under statutes like the Administrative Procedure Act.^[75] Each agency maintains internal structures, such as dedicated rulemaking offices, to draft, propose, and finalize rules, with the office of general counsel playing a pivotal role in providing legal review, ensuring procedural compliance, and advising on statutory interpretation to mitigate litigation risks.^[76] This siloed agency-level execution, lacking unified coordination beyond ad hoc mechanisms, amplifies inconsistencies as specialized bureaucracies pursue domain-specific mandates without holistic oversight. Centralized elements include the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB), which reviews 500 to 700 significant proposed and final rules annually for economic impact, consistency with presidential priorities, and analytical rigor under Executive Order 12866.^[77] Additionally, federal advisory committees established under the Federal Advisory Committee Act (FACA) supply external expertise and public input during rulemaking, though their operations—numbering in the hundreds across agencies—are agency-managed and often limited to advisory rather than decisional roles, promoting transparency but not resolving inter-agency conflicts. In scale, this apparatus generates substantial output: federal agencies published 3,018 final rules in 2023, alongside thousands of proposed rules, with duplication evident in overlapping jurisdictions such as the Environmental Protection Agency (EPA) and Department of Energy (DOE) regulations on emissions and energy efficiency standards.^[78]^[79] Such fragmentation fosters mission creep, as agencies extend interpretations beyond core statutory bounds, and unbalanced outcomes from compartmentalized expertise that prioritizes regulatory detail over cross-cutting innovation or cost efficiencies, per Government Accountability Office analyses of redundant programs.^[79]

Role in Private Industry

In private industry, rulemaking analogs manifest through the formulation of internal policies and compliance programs, which corporate boards and executives establish via deliberative processes unencumbered by public notice-and-comment requirements. These mechanisms, often inspired by statutes like the Sarbanes-Oxley Act of 2002, emphasize internal controls for financial integrity and risk management, implemented through management directives and oversight committees rather than external mandates.^[80]^[81] Private firms voluntarily adopt such frameworks to align operations with ethical and operational goals, enabling tailored adaptations that reflect firm-specific incentives without the diffusion of authority inherent in centralized government processes. Corporate compliance initiatives yield efficiency advantages over coercive public rulemaking by facilitating swift iteration and cost containment. For example, technology companies leveraging agile governance models incorporate real-time feedback to expedite policy updates, achieving reductions in compliance-related project delays by 30% in documented cases.^[82] Empirical analyses confirm that robust compliance programs diminish operational expenses and bolster returns on investment by preempting violations and streamlining internal audits, contrasting with the administrative burdens of federal delays that can span years.^[83]^[84] Voluntary standards such as ISO 14001 exemplify this decentralized approach, where adoption in high-pollution sectors correlates with measurable impacts on sales growth and cost structures, driven by market-driven incentives rather than regulatory compulsion.^[85] While these private processes promote innovation through localized decision-making—free from the need to reconcile disparate stakeholder inputs—they inherently lack the coercive enforceability of state rules, binding participants only via contractual or reputational mechanisms.^[86] This limitation highlights how corporate rulemaking complements broader governance by incentivizing self-interested alignment, fostering adaptability in dynamic markets without imposing uniform mandates that may stifle voluntary cooperation.^[87]

Judicial Oversight

Standards of Review

Under the Administrative Procedure Act (APA), courts review agency rulemaking under 5 U.S.C. § 706(2)(A), which requires setting aside actions found to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." For informal notice-and-comment rulemaking, the predominant arbitrary-and-capricious standard demands that agencies demonstrate reasoned decision-making supported by the administrative record, ensuring decisions rest on empirical evidence rather than mere assertions or deviations from statutory mandates.^[88] This review checks agency rationality by verifying that rules reflect a logical nexus to factual findings and statutory authority, preventing imposition of policy preferences unsupported by data or analysis.^[89] The seminal case of Motor Vehicle Manufacturers Ass'n v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29 (1983), established key elements of this standard, holding that agencies must "examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made."^[88] In that decision on June 24, 1983, the Supreme Court vacated the National Highway Traffic Safety Administration's rescission of a passive restraint (airbag) rule, citing the agency's failure to address foreseeable alternatives, disregard of prior findings on restraint efficacy, and absence of evidence justifying the policy shift despite 32,000 annual traffic fatalities linked to inadequate restraints.^[89] Such lapses render rules vulnerable to invalidation, as courts probe whether agencies ignored critical evidence, offered explanations contradicting the record, or overlooked vital problem aspects.^[88] Challengers to rules bear the evidentiary burden to demonstrate arbitrary action, confronting a presumption of agency regularity where the scope of review remains narrow and deferential to expertise absent clear errors.^[90] Procedural flaws, such as inadequate responses to significant comments or failure to quantify costs and benefits with record data, or substantive errors like unsubstantiated empirical claims, can trigger remand. Empirical analysis of major rules—those with economic impacts exceeding $100 million annually—reveals courts remand or invalidate 30-40% of challenged cases, underscoring the standard's role in enforcing evidence-based rulemaking over unchecked discretion.^[91] This outcome rate reflects rigorous scrutiny of rationality, prioritizing statutory fidelity and verifiable facts to curb agency overreach.^[92]

Evolution and Overturn of Chevron Deference

In Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., decided June 25, 1984, the Supreme Court articulated a two-step framework for reviewing agency statutory interpretations under the Administrative Procedure Act.^[93] Courts first ascertain whether Congress has directly spoken to the precise question at issue; if the statute is ambiguous or silent, they defer to the agency's interpretation if it is reasonable and consistent with the statutory scheme.^[94] This doctrine shifted interpretive authority from judges to agencies, presuming congressional intent to delegate policymaking discretion amid technical complexity.^[95] Chevron deference expanded significantly over four decades, cited in over 18,000 court decisions and applied to affirm agency actions across regulatory domains.^[96] It facilitated instances of regulatory expansion, such as the Environmental Protection Agency's interpretation of the Clean Air Act to encompass greenhouse gas emissions as air pollutants, upheld in Massachusetts v. EPA (2007) on grounds of agency reasonableness despite textual debates over the statute's scope.^[97] Proponents viewed it as respecting agency expertise, but detractors contended it abdicated the judiciary's constitutional duty under Article III to say what the law is, enabling agencies to resolve ambiguities in self-serving ways and blurring separation of powers.^[98] The doctrine met its end in Loper Bright Enterprises v. Raimondo, decided June 28, 2024, where a 6-3 majority overruled Chevron, declaring that courts alone must interpret statutes through traditional tools of construction, without mandatory deference to agency views.^[98] Chief Justice Roberts emphasized that Chevron conflicted with the APA's mandate for courts to "decide all relevant questions of law" and undermined judicial primacy in checking executive overreach.^[99] The ruling preserved Skidmore v. Swift & Co. (1944) respect for agency interpretations—proportional to their persuasiveness, informed by factors like expertise, consistency, and thoroughness—but rejected any presumption of validity that displaces independent judicial judgment.^[100] Immediate repercussions emerged in 2024-2025 litigation, with federal courts vacating prior rulings reliant on Chevron and remanding dozens of cases for de novo review, including challenges to National Marine Fisheries Service fees on fishing vessels.^[101] This shift has prompted agencies to bolster statutory justifications in rulemakings and heightened scrutiny of interpretive rules, fostering a recalibration toward congressional text as the controlling interpretive anchor.

Criticisms and Economic Impacts

Regulatory Overreach and Costs

The total compliance costs and economic effects of federal regulations in the United States are estimated at $2.1 trillion to $2.155 trillion annually, equivalent to roughly 10% of gross domestic product and exceeding the cost of the federal income tax.^[102]^[103] These figures, derived from the Competitive Enterprise Institute's analysis of regulatory impacts, encompass direct compliance expenditures by businesses and households, as well as indirect effects such as reduced productivity and market distortions, highlighting a burden that imposes unlegislated constraints on economic liberty and growth without corresponding congressional authorization.^[104] Regulatory overreach manifests when agencies interpret statutes beyond their plain text, as seen in expansions of the Environmental Protection Agency's "Waters of the United States" (WOTUS) rule under the Clean Water Act. The Obama-era WOTUS rule, finalized in 2015, broadly redefined federal jurisdiction to include intermittent streams and remote wetlands, prompting legal challenges for exceeding statutory limits on "navigable waters"; it was stayed nationwide in 2015 and ultimately invalidated by federal courts in 2019.^[105] Subsequent Biden administration attempts to reinstate expansive definitions faced similar rebukes, culminating in the Supreme Court's 2023 Sackett v. EPA decision, which curtailed agency authority by requiring a continuous surface connection to traditional navigable waters for wetland regulation, thereby reining in interpretive overreach that had imposed permitting costs on landowners without clear legislative basis.^[106]^[107] Major legislative rules like the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 exemplify cumulative economic drag from rulemaking, with implementation rules generating an estimated $895 billion in lost GDP from 2016 to 2025 through heightened compliance burdens on financial institutions, reduced lending, and stifled capital formation.^[108] This equates to an average annual GDP reduction of approximately $90 billion, or 0.5% of U.S. GDP, by constraining credit availability and increasing operational costs for banks, which diverted resources from productive investment to regulatory adherence.^[109] Such impacts underscore how rulemaking under broad statutes amplifies unaccounted burdens, contributing to slower growth without proportional stability gains. Agency cost-benefit analyses frequently understate true regulatory costs by omitting dynamic effects, such as reduced innovation and long-term productivity losses, according to critiques from bodies like the Government Accountability Office (GAO). GAO reviews of federal rulemaking found inconsistent inclusion of key analytical elements, with variations in how agencies quantified indirect costs and benefits, often leading to incomplete assessments that favor rule adoption.^[110] Empirical studies corroborate this, showing that regulatory accumulation deters firm-level innovation by raising uncertainty and compliance hurdles; for instance, research indicates firms scale back R&D and hiring when growth triggers additional regulatory scrutiny, resulting in measurable declines in patenting and technological advancement.^[111]^[112] These overlooked dynamic losses—estimated to compound annual costs beyond static compliance figures—challenge claims of net societal benefits, as regulations distort resource allocation and impede causal pathways to economic expansion.^[113]

Challenges to Democratic Legitimacy

The non-delegation doctrine posits that Congress cannot transfer its core legislative powers to executive agencies without providing an intelligible principle to guide their discretion, a standard articulated by the Supreme Court in J.W. Hampton, Jr. & Co. v. United States in 1928, which upheld a delegation to the President for tariff adjustments so long as it conformed to congressional policy objectives.^[114] Despite this framework, successful challenges to delegations have been exceedingly rare, with only two invalidations during the New Deal era and none since, allowing agencies to exercise substantial lawmaking authority through rulemaking without direct electoral accountability.^[115] Critics contend this erodes democratic legitimacy, as unelected bureaucrats craft binding rules that function as de facto legislation, bypassing the voters' representatives in Congress and insulating policy from periodic electoral corrections.^[116] In Gundy v. United States (2019), Justice Gorsuch's dissent highlighted these concerns, arguing that broad delegations, such as the authority granted to the Attorney General under the Sex Offender Registration and Notification Act to apply retroactively, violate separation of powers by permitting agencies to make value judgments traditionally reserved for elected legislators.^[116] Such delegations enable agencies to pursue policy objectives aligned with the executive branch's ideology rather than enduring legislative consensus, fostering "regulation without representation" where citizens bear regulatory burdens imposed by officials not subject to direct voter oversight.^[117] This dynamic undermines the causal link between governance and democratic consent, as rulemaking allows for iterative policy experimentation unchecked by the bicameralism and presentment required for statutes. Partisan influences exacerbate these legitimacy deficits, with agencies exhibiting spikes in rulemaking activity at the close of presidential terms—termed "midnight rulemaking"—to entrench policies before a transition.^[118] For instance, the Obama administration finalized 41 economically significant rules in its final months from November 2016 to January 2017, while similar surges occurred under Trump in late 2020 and Biden in 2024.^[119] These rushes contribute to policy volatility, as incoming administrations frequently rescind or reverse prior rules, with analyses indicating that a substantial share—often over half in targeted areas like major regulations—are modified or repealed across partisan shifts, highlighting rulemaking's provisional nature compared to stable statutory law.^[120] This pattern of reversible, executive-driven regulation further distances rulemaking from democratic accountability, as it prioritizes temporary political control over voter-mediated deliberation.^[121]

Reforms and Recent Developments

Legislative Reform Efforts

The Regulations from the Executive in Need of Scrutiny (REINS) Act, first introduced in the 112th Congress on December 7, 2011, mandates congressional approval via joint resolution for any major rule projected to impose an annual economic impact exceeding $100 million. Subsequent versions, including H.R. 527 in the 113th Congress (2013) and S. 184 in the 118th Congress (2023), have passed the House multiple times but failed to advance in the Senate, often due to filibuster threats and opposition from Democrats concerned about delaying agency actions on public health and safety.^[122] Proponents argue it restores legislative primacy by subjecting significant regulatory costs to direct electoral accountability, while critics contend it could paralyze routine rulemaking; despite non-enactment, the bill's framework has heightened congressional scrutiny of agency outputs. The Congressional Review Act (CRA) of 1996, enhanced by REINS-inspired momentum, has enabled Congress to rescind rules through expedited procedures, demonstrating partial success in constraining rulemaking. In the 115th Congress (2017-2018), lawmakers approved 16 joint resolutions of disapproval, signed by President Trump, targeting late-Obama-era regulations such as the Stream Protection Rule and certain labor protections—far exceeding prior usages of one in 2001 and none between. This "lookback" provision, allowing review of rules finalized in the prior administration's final 60 legislative days, facilitated bipartisan targeting of perceived overreaches, though primarily along party lines, underscoring CRA's role as a legislative backstop absent broader reforms.^[123] Proposals for sunset provisions—requiring periodic agency review and automatic expiration of rules unless reauthorized—and regulatory cost caps have garnered intermittent bipartisan support but faced enactment barriers. Bills advocating contingent sunsets, where rules lapse after fixed intervals unless Congress intervenes, aim to embed dynamic evaluation into rulemaking, drawing from state models like Tennessee's one-year automatic reviews.^[124] Concepts for federal "regulatory budgets," capping aggregate annual compliance costs akin to fiscal limits, trace to bipartisan precedents but have stalled amid veto threats and partisan disputes over baseline calculations.^[125] Empirical data indicate these efforts yield targeted rescissions—e.g., CRA's 16 in 2017 reduced estimated costs by billions—but fail to systematically restore legislative control, as agencies adapt by bundling impacts below thresholds or accelerating issuances. Overall, such reforms exhibit mixed efficacy, bolstering episodic oversight without curbing rulemaking's volume, which exceeded 3,000 final rules annually in recent decades.

Supreme Court Interventions Post-2024

In Loper Bright Enterprises v. Raimondo, decided on June 28, 2024, the Supreme Court overruled the Chevron doctrine, holding that courts must exercise independent judgment in interpreting statutes rather than deferring to an agency's permissible construction of ambiguous provisions, thereby restoring judicial authority over agency interpretations as a check on bureaucratic overreach.^[98] This decision, authored by Chief Justice Roberts in a 6-3 ruling, emphasized that statutory interpretation is a core judicial function under the Administrative Procedure Act (APA), rejecting agency claims to superior expertise in resolving ambiguities.^[99] Complementing this, Corner Post, Inc. v. Board of Governors of the Federal Reserve System, issued July 1, 2024, clarified that the six-year statute of limitations for APA challenges begins accruing when a plaintiff suffers injury from a rule, not at finalization, enabling late-entrant parties to contest longstanding regulations and broadening avenues for scrutiny of entrenched agency actions.^[126]^[127] These rulings facilitated increased challenges to agency rulemaking post-2024, particularly in tandem with SEC v. Jarkesy (June 27, 2024), where the Court, in another 6-3 decision, ruled that the Securities and Exchange Commission's use of in-house administrative law judges to impose civil penalties for securities fraud violates the Seventh Amendment right to a jury trial in suits at common law, mandating Article III court proceedings for such enforcement and curtailing agencies' self-adjudicative powers.^[128]^[129] In the 2024-2025 term, the Court continued this trajectory with Trump v. CASA, Inc. (June 27, 2025), which substantially restricted district courts' equitable authority to issue universal injunctions blocking executive actions nationwide, limiting judicial overreach that had previously stalled agency deregulatory efforts and preserving the executive's capacity to implement policy changes without blanket halts.^[130] These interventions collectively reinforce separation of powers by shifting interpretive and enforcement authority from unelected agencies to courts and elected branches, reducing bureaucratic insulation from accountability. Under the second Trump administration, inaugurated January 20, 2025, these judicial constraints have accelerated deregulatory initiatives, with executive directives like Memorandum M-25-36 (October 21, 2025) streamlining White House review of repeal actions and authorizing "good cause" exemptions to bypass notice-and-comment requirements for eliminating burdensome rules, enabling faster reductions in regulatory volume.^[131] By mid-2025, implemented deregulatory measures had generated net cost savings exceeding $700 billion since January, per regulatory trackers, with a reinstated 10-to-1 rule—requiring agencies to eliminate ten existing regulations for each new one—projected to yield substantial overall reductions in the federal regulatory corpus.^[132]^[133] Such efforts, informed by post-Loper Bright judicial skepticism of agency deference, target ossified rules across sectors, prioritizing economic efficiency over administrative inertia while inviting further court validation of streamlined repeals.^[134]

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'Ten Thousand Commandments' report on federal regulation ...
Jul 30, 2024 · In total, regulation imposed a $2.1 trillion total cost, rivaling the $2.3 trillion income tax cost. “Regulatory compliance costs and mandates ...
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AG Paxton Wins Major Court Victory to End Unlawful Obama-Era ...
May 29, 2019 · Attorney General Ken Paxton today announced that his office won a major court victory to hold unlawful the Obama-era Waters of the United States (WOTUS) rule.<|separator|>
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Supreme Court Strikes Down EPA Overreach in WOTUS Ruling
May 26, 2023 · On Thursday, May 25, the U.S. Supreme Court issued its highly anticipated WOTUS ruling (Sackett vs. EPA), pushing back against federal ...Missing: struck | Show results with:struck
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WOTUS OVERTURNED BY SCOTUS: Sackett v. EPA Redefines ...
Jun 12, 2023 · On May 25 the United States Supreme Court, ruling in the case of Sackett v. EPA, sharply limited the scope of protection for the nation's ...
[108]
The Growth Consequences of Dodd-Frank - AAF
May 6, 2015 · The consequences are significant – roughly $895 billion in reduced Gross Domestic Product (GDP) over the 2016-2025 period, or $3,346 per working ...Missing: drag | Show results with:drag
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Dodd-Frank Act Leaves America Less Stable, Less Prosperous ...
Jul 21, 2015 · Second, in addition to making our economy less stable, the Dodd- Frank bill has made us less prosperous. Under the Obama economic strategy of ...
[110]
Agencies Included Key Elements of Cost-Benefit Analysis, but ...
Sep 11, 2014 · What GAO Found How often and to what extent agencies included selected key elements of cost-benefit analysis varied by rule type.
[111]
Does regulation hurt innovation? This study says yes - MIT Sloan
Jun 7, 2023 · Firms are less likely to innovate if increasing their head count leads to additional regulation, a new study from MIT Sloan finds.Missing: empirical dynamic losses
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[PDF] The Impact of Regulation on Innovation in the United States
The debate over the impact of government regulation on innovation in the United States is framed in the context of the gradual decline of economic ...
[113]
[PDF] The Economics of Deregulation Dr. Patrick A. McLaughlin Research ...
Feb 11, 2025 · Regulatory accumulation slows economic growth, distorts business investment, and can reduce safety, while poor design can create costs without ...Missing: studies | Show results with:studies
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J. W. Hampton, Jr. & Co. v. United States | 276 U.S. 394 (1928)
If Congress shall lay down by legislative act an intelligible principle to which the person or body authorized to fix such rates is directed to conform ...Missing: doctrine | Show results with:doctrine
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ArtI.S1.5.3 Origin of Intelligible Principle Standard
The principle was explicitly set forth in the 1928 case, J. W. Hampton, Jr. & Co. v. United States, in which the Supreme Court upheld Congress's delegation ...
[116]
[PDF] 17-6086 Gundy v. United States (06/20/2019) - Supreme Court
Jun 20, 2019 · The nondelegation doctrine bars Congress from trans- ferring its legislative power to another branch of Govern- ment. This case requires us to ...
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Congress needs to end regulation without representation
Sep 4, 2024 · So why is regulation without representation not considered an equal threat to freedom? Federal agencies constantly issue regulations that fail ...Missing: rulemaking criticism
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Federal Rulemaking: Trends at the End of Presidents' Terms ...
Jan 31, 2023 · Federal agencies issue more regulations shortly before a president leaves office. This is often called "midnight rulemaking."Missing: spikes Biden
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Measuring the Obama Administration's Historic Midnight Surge
Feb 6, 2017 · President Obama left office with a bang, issuing 41 economically significant rules between November 1, 2016 and January 19, 2017.
[120]
Agency Rescissions of Legislative Rules - Congress.gov
Feb 8, 2021 · For example, the APA exempts non-legislative rules—such as interpretive rules that construe the laws an agency administers but which carry no ...
[121]
[PDF] GAO-23-105510, FEDERAL RULEMAKING
Jan 31, 2023 · After removing the 11 rules specifically related to the federal government's COVID-19 response, agencies published on average 2.6 times more ...
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S.184 - Regulations from the Executive in Need of Scrutiny Act of 2023
This bill revises provisions relating to congressional review of agency rulemaking. Specifically, the bill establishes a congressional approval process for a ...Missing: proposals | Show results with:proposals<|separator|>
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The Lookback Mechanism and Presidential Transitions | Congress.gov
Jul 9, 2024 · The lookback mechanism provides Congress with additional time to review rules that were submitted toward the end of the previous session.
[124]
Sunset and Cost Benefit Analysis Reforms in the State Regulatory ...
Jun 7, 2024 · Without sunset provisions, agencies have little to no incentive to reconsider a rule in any context other than the one in which it passed, ...
[125]
The eventual federal regulatory budget has bipartisan roots
Apr 15, 2024 · Congress would approve increases in overall total regulatory costs. This approach incentivizes cost containment and more rational decision- ...
[126]
[PDF] 22-1008 Corner Post, Inc. v. Board of Governors, FRS (07/01/2024)
Jul 1, 2024 · In 2021, Corner Post joined a suit brought against the Board under the Administrative Procedure Act (APA). The complaint challenged. Regulation ...
[127]
Corner Post, Inc. v. Board of Governors of the Federal Reserve System
The case concerns the interchange fees associated with debit card transactions, which generate billions of dollars in revenue for issuing banks.
[128]
[PDF] 22-859 SEC v. Jarkesy (06/27/2024) - Supreme Court
Jun 27, 2024 · Held: When the SEC seeks civil penalties against a defendant for securi- ties fraud, the Seventh Amendment entitles the defendant to a jury.
[129]
Securities and Exchange Commission v. Jarkesy - Oyez
After an evidentiary hearing by an Administrative Law Judge (ALJ), Jarkesy was found guilty of securities fraud. Jarkesy sought review by the Commission, and ...
[130]
[PDF] 24A884 Trump v. CASA, Inc. (06/27/2025) - Supreme Court
Jun 27, 2025 · The Government argues that the District Courts lacked equitable authority to impose universal relief and has filed three nearly identical ...
[131]
https://www.whitehouse.gov/wp-content/uploads/2025/10/M-25-36-Streamlining-the-Review-of-Deregulatory-Actions.pdf
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https://www.americanactionforum.org/week-in-regulation/one-rulemaking-and-one-memo/
[133]
The 2025 Deregulation Agenda - Forecasts and Trends
Sep 30, 2025 · The Trump administration has significantly tightened regulatory policy with a 10-to-1 mandate, requiring agencies to eliminate ten existing ...
[134]
Tracking regulatory changes in the second Trump administration
The administration states that the "good cause" exemption applies to this rule from notice-and-comment procedures typically required under the ...