It is reasonable to think that Trump’s midnight would have been devoted to last‐minute deregulation, but that was not the case. These Trump rules will impose billions of dollars in new compliance costs and tens of millions of hours in paperwork burdens on Americans. The new Biden administration will likely undo many of these midnight regulations, in some instances lessening burdens on individuals and business.
2020 in perspective/ Before last fall’s election, the Trump administration’s rulemaking record was not dissimilar to other presidents’ final year in office. The Office of Information and Regulatory Affairs (OIRA), which is charged with reviewing and approving executive agency actions, typically discharges 40–50 regulations a month. For perspective, from January to May of 2020, OIRA averaged 43 concluded reviews per month. That number jumped to 58 from June to October.
One might speculate that the increase was a push to publish rules before the start of the “lookback period” under the Congressional Review Act, the timeframe in which a new Congress can use a simple resolution to undo rulemaking from the final months of the last administration. The lookback period for 2020 began August 21, 2020, so anything after that date is fair game for Democrats to repeal in early 2021.
And there will be plenty of regulatory targets for the new Congress and President Joe Biden. From November 2020 to January 19, 2021, the Trump administration’s pace of rulemaking picked up considerably. From 56 rules in November, to 84 in December, and finally 71 in less than three weeks in January, the Trump administration nearly equaled the record midnight output of 99 rules in a month during President Barack Obama’s midnight period. The Trump team also pushed out 216 OIRA regulatory reviews in the midnight period, compared to 217 for the Obama administration. For a Republican comparative, President George W. Bush’s OIRA approved 181 rules during his midnight. More noteworthy, Trump’s OIRA reviewed 62 “economically significant” rules (those with an economic impact of $100 million or greater) compared to just 45 for Obama and 40 for Bush. By virtually every metric, Trump’s midnight period advanced regulations at a breakneck pace.
In terms of compliance costs, data compiled by the American Action Forum indicate the Trump midnight rules will impose a truly staggering burden for what amounts to a few weeks of regulating. On a net‐present‐value basis, the Trump administration approved more than $37 billion in total regulatory costs, which on an annualized basis works out to about $4 billion. Equally startling is the figure for new paperwork: 64 million burden hours. This translates to more than 32,000 employees working full‐time for a year filling out new forms — hardly the work of a deregulatory champion.
The new costs are primarily driven by a $34 billion Health and Human Services rule intended to control “surprise” medical billing. (See “The Potential Pitfalls of Combating Surprise Billing,” Fall 2019.) It imposes $2.4 billion in annual costs and more than 57 million paperwork burden hours. This mammoth rule was under OIRA review for less than two months. Given bipartisan support for the rule, it has a decent chance of staying in place for the next four years, although some modifications are possible.
Another noteworthy midnight rule came from the Environmental Protection Agency, which published a measure to amend lead and copper drinking water standards. According to the regulatory impact analysis, the measure imposes $3.8 billion in net present value costs and $270 million in annual costs, though supposedly it has zero new paperwork burden hours. Although the fate of this rule is currently unknown, many expect the Biden administration to undo or significantly revise as many of Trump’s climate and environmental rules as possible in the next four years.
Any deregulation?/ With the strong slate of rules imposing new burdens, one might assume they would be balanced out by rules that dramatically decrease compliance costs. But Trump’s midnight offered only a few such rules. The biggest cost‐cutter is a Department of Labor rule on who qualifies as an independent contractor as opposed to an employee. The rule would produce a regulatory savings of about $315 million a year. None of the other Trump midnight deregulations create so much as $100 million in annual savings. All told, these deregulatory rules total just shy of $900 million in savings per year, while the new regulatory rules create a total of $5 billion in annual costs. And the Labor Department rule may not survive the early stages of the Biden administration; many expect a quick reversion to the Obama administration’s standards. If that happens, the net annualized cost of rules issued during Trump’s midnight will be higher than Obama’s.
The lack of deregulation during Trump’s midnight period should be put in context with his broader posture toward deregulation. OIRA’s final “Unified Agenda” of regulatory and deregulatory actions listed 101 rulemakings as “completed actions” and 496 as active. The administration certainly had a busy agenda planned for the second term that never arrived. Given the fruits of Trump’s midnight period and the lack of wholesale deregulation during his four years in office (only 2018 saw a net reduction in cumulative, government‐wide burdens), one cannot help but consider Trump’s posturing as a deregulator to be showmanship rather than statesmanship.
Rushed regulations/ Much of the debate over midnight regulation centers around whether these rules are “rushed,” potentially reducing their quality and leading to more (and often successful) legal challenges. The data strongly suggest that several Trump midnight rules went through the process in an unusually short period of time. During the last days of the Trump administration, OIRA and regulators managed to approve 22 rules in seven days or less; six were approved in technically “zero” days. For fans of rigorous inter‐agency review and a thorough vetting of benefit‐cost analyses, this must be upsetting. On the other hand, there were eight measures that spent more than 300 days at OIRA and were discharged during the midnight period — but of those, four were withdrawn by agencies for unknown reasons.
At the macro level, the average OIRA review time for measures discharged during Trump’s midnight period is 61 days. Excluding the withdrawn measures yields an average of just 54 days. The median review time is a mere 29 days (both including and excluding the withdrawn measures). By contrast, the average review time for midnight rulemakings during the Obama era was 82 days, a period typical of other administrations. Trump’s 61‐day average is shocking because typically many midnight rules have been lingering in regulatory purgatory. Sometimes the delay owes to political machinations or an agency prioritizing other efforts elsewhere, or to waiting for new data or trying to figure out how to address an obvious deficiency. The confluence of these factors, combined with political exigencies, can often drive up the average review time for midnight rules — but not for the Trump administration.
One last surprise from the Trump midnight era is that January 2021 saw an incredible flurry of review activity. President Obama’s final January in office produced 61 reviews. Trump’s OIRA managed to review 73 measures from January 1 to January 19. In fact, there were 13 rules agencies pushed to OIRA in January that OIRA discharged (including one subsequently withdrawn rule) that same month. Mathematically, the review times for these rules were short: an average of just three days. Those are quick turnaround times. And as discussed above, many of them could be on the chopping block now that the Biden administration is in place.
Out with a whimper/ More than four years ago, candidate Trump claimed he would cut federal regulations by 70%. That came nowhere close to happening; at best, only the flow of new regulations fell significantly in his administration’s early years, and even that dampened as time went on. (See “Trump’s Regulatory Legacy: A First Draft,” Winter 2020–2021.) Trump’s critics may have had reason to decry specific deregulatory moves, but ultimately there was much less substantive deregulation than either his supporters or critics claim.
In the end, when his administration was headed for the door, it acted as previous administrations act: it pushed through as many regulations as possible, as fast as possible, with little regard for rigorous review or policy durability. Despite all the deregulatory rhetoric of years past, Trump’s midnight was a typical midnight, filled with huge new regulatory burdens, rushed rules, and new compliance nightmares for some industries. The regulatory beat goes on.