Drone Industry Pans Trump Regulatory Plan

Many thanks to the unmanned drone industry, which last week said the obvious about Donald Trump’s idea for government agencies to repeal two existing regulations for every new rule they want to adopt: it’s a simplistic notion that could actually harm new industries more than it helps them.

The Commercial Drone Alliance sent a letter to the Office of Information and Regulatory Affairs on Feb. 9, asking that any new rule the FAA proposes to encourage the unmanned drone industry be counted as a “deregulatory action,” and therefore exempt from the regulatory repeal order Trump signed on Jan. 30.

Why? Because the FAA’s existing rules—which are extensive—were adopted long before drones started peeping into our backyards and interfering with commercial aviation. So a new rule that accommodates drones is really cleaning up the thicket of old rules that don’t.

Or, as the CDA diplomatically phrased it, “The general goal is to encourage the FAA to implement regulations that repeal aspects of the Federal Aviation Regulations that hold the drone industry back in ways that are nonsensical.”

The drone people are one example of the broader point that Trump’s 2-for-1 regulatory kill order is a blunt instrument. New businesses and new products practices sometimes require new regulation as they grow. It does not logically follow that old businesses therefore suddenly become risk-free, and we can discard old regulation to make way for the new.

Yes, we should always be hunting for unnecessary regulation that can go into the dustbin. We can do cost-benefit analyses. We can have vigorous arguments about what regulations really are necessary for a new product or industry.

But all that is the process of smart regulation (as tortured as that process may be). What Trump proposes is regulation by auto-pilot. The world doesn’t work that way. Just imagine a teenager insisting that for every new rule you impose on his behavior, you have to repeal two prior rules. You’d laugh and ignore him. Behaviors change and get more sophisticated over time; teens need nuanced, intelligent rules that can keep up and foster responsibility. The same is true of businesses.

About That 2-for-1 Kill Order

Thankfully, Trump’s executive order acknowledges this reality in oblique ways. Foremost for compliance officers, his executive order does not cover the Securities & Exchange Commission, the Public Company Accounting Oversight Board, or the Financial Accounting Standards Board. They are all defined by law as independent agencies, which are exempt from Trump’s fancy proclamations behind fancy desks.

Honestly, I wondered if Trump understood that when he drafted the order; it seems just the sort of loophole that would send his authoritarian self into orbit. But eventually the Office of Management & Budget did confirm that the SEC and its brethren are exempt.

Clearly Republicans running the SEC will try to achieve the spirit of the 2-for-1 kill order anyway. But it’s not a requirement.

Second, even for agencies where Trump’s executive order does apply, the order itself has several crucial escape clauses. Regulations relevant to military, national security, or foreign policy are exempt. Each agency will get a budget for new regulatory costs from the Office of Management and Budget—but new regulations required by law won’t be subject to that cap. Emergencies that address health, safety, or financial matters can get a waiver from the order. (Recall those hastily drafted financial rules in the summer of 2008; or emergency inspection of mines after the Massey Energy disaster that killed 29 miners in 2010.)

And regardless of those caveats, when agencies do propose the required two deregulatory actions, those suggested repeals still go through the standard propose-and-comment process. Which, as any compliance officer knows, can take forever.

In other words, like most of the Trump presidency so far, the regulatory kill order is lots of bluster and little substance. In due time, as Trump’s Cabinet members finally take office, we may see their anti-regulation zeal start to bite.

Let’s just hope that they follow the drone industry’s suggestion, and bite thoughtfully.