Timothy A. Raty
On February 24, 2017 President Trump signed a new executive order entitled “Enforcing the Regulatory Reform Agenda,” which corresponds with the executive order he signed late in January, entitled “Reducing Regulation and Controlling Regulatory Costs” (Executive Order 13771; full copies of both orders can be found here and here, respectively). The stated policies of these orders are to “alleviate unnecessary regulatory burdens placed on the American people” and that “for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.”
These purposes beg the question: What affect will these executive orders have on TRID and other regulations issued by the CFPB (assuming the CFPB will continue to exist in the future, pending the outcome of Congressional and Judicial decisions)? Will the CFPB be able to issue new regulations without eliminating other ones? If not, what regulations are likely to be eliminated?
Reducing Regulation and Controlling Regulatory Costs
Executive Order 13771 specifically states that, “unless prohibited by law”, any executive department or agency shall, when it proposes a new regulation, identify at least two existing regulations for repeal during Fiscal Year 2017 (see Exec. Order 13771, § 2[a]). In addition, “any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.” (Ibid. § 2[c]; emphasis added) The Director of the Office of Management and Budget (currently John Michael Mulvaney) is authorized to issue guidance as to how these goals are to be met (see Ibid. § 2[d]). A similar procedure is to be done in subsequent fiscal years (see Ibid. § 3[a]).
Despite these broad goals of reducing regulations, Sections 4 and 5 limit the types of regulations this Order applies to. Section 4 defines “Regulation” or “rule” and exempts certain regulations, including “any other category of regulations exempted by the Director.” (Ibid. § 4[c]). Section 5 explicitly states that “nothing in this order shall be construed to impair or otherwise affect: (i) the authority granted by law to an executive department or agency, or the head thereof” (Ibid. § 5[a]).
Interim guidance issued by the Office of Information and Regulatory Affairs (“OIRA”; available here), further stipulates that this Executive Order does not apply to “significant regulatory actions of independent agencies” (which currently includes the CFPB). In addition, “new significant guidance or interpretive documents will be addressed on a case-by-case basis.”
Enforcing the Regulatory Reform Agenda
The newest of these two orders provides more structure as to how the goals of the older order are to be implemented. It requires each agency to appoint a “Regulatory Reform Officer” (“RRO”) to “oversee the implementation of regulatory reform initiatives and policies”, including:
- Executive Order 13771 (Reducing Regulation and Controlling Regulatory Costs);
- Executive Order 12866 (Regulatory Planning and Review);
- Executive Order 13563, § 6 (Improving Regulation and Regulatory Review); and
- The termination of “programs and activities” that derive from obsolete directives (see § 2[a]).
Each RRO will chair a “Regulatory Reform Task Force” for each agency, which “Force” is comprised of:
- The RRO;
- The Regulatory Policy Officer (“RPO”) designated under Exec. Order 12866;
- A representative from the agency’s central policy (or equivalent) office; and
- For most Cabinet-level Departments, at least three senior agency officials (appointed by the agency head; see § 3[a]).
Each Task Force “shall evaluate existing regulations . . . and make recommendations to the agency head regarding their repeal, replacement, or modification, consistent with applicable law.” At a minimum, the Task Force must identify regulations that:
- Eliminate jobs or inhibit job creation;
- Are outdated, unnecessary, or ineffective;
- Impose costs that exceed benefits;
- Create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies;
- Are inconsistent with requirements implemented for enacting the Paperwork Reduction Act, in particular those regulations that rely in whole or in part on data, information, or methods that are not publicly available or that are insufficiently transparent to meet the standard for reproducibility; or
- Derive from or implement Executive Orders or other Presidential directives that have been subsequently rescinded or substantially modified.
Each agency head “should prioritize . . . those regulations that the agency’s [Task Force] has identified as being outdated, unnecessary, or ineffective.” Note, however, that nothing in the Executive Order “shall be construed to impair or otherwise affect: (i) the authority granted by law to an executive department or agency, or the head thereof.” (§ 6)
How is TRID Affected
Key provisions of these Executive Orders indicate that regulations will be repealed in conformance with applicable law. As such, it is unlikely that the provisions related to TRID will be repealed or replaced, due to the fact that the regulations implementing TRID are specifically required under amendments made to RESPA and TILA by the Dodd-Frank Act (124 Stat. 1376 ) and, as such, they are required by applicable, statutory law:
“The Bureau shall publish a single, integrated disclosure for mortgage loan transactions (including real estate settlement cost statements) which includes the disclosure requirements of this section and section 2604 of this title, in conjunction with the disclosure requirements of the Truth in Lending Act that, taken together, may apply to a transaction that is subject to both or either provisions of law. . . .” (12 USCA § 2603[a])
“The Bureau shall publish a single, integrated disclosure for mortgage loan transactions (including real estate settlement cost statements) which includes the disclosure requirements of this subchapter in conjunction with the disclosure requirements of the Real Estate Settlement Procedures Act of 1974 that, taken together, may apply to a transaction that is subject to both or either provisions of law.” (15 USCA § 1604[b])
In addition to this, it is unlikely that TRID will be eliminated due to the following elements connected with these Executive Orders:
- Each agency’s Task Force must prioritize which regulations to replace, repeal, or modify based on whether the regulation is “outdated, unnecessary, or ineffective.” The first two criteria clearly do not apply, while the latter is a subjective determination which will be made by the applicable Task Force – but considering how much research was invested to support the effectiveness of the Integrated Disclosures, it is a “long shot” that they would be considered “ineffective.”
- The interim guidance from the Office of Information and Regulatory Affairs indicates that “significant regulatory actions of independent agencies” are not affected. Currently, this would include the CFPB and TRID is certainly one of the most significant regulatory actions taken by the Bureau during its existence.
It’s possible, however, for TRID to be modified if the right conditions are met, including (but not limited to) the following:
- The Federal Courts hold the CFPB to not be an independent agency; and/or
- TRID is found to be ineffective (again, a subjective measure).
In regards to the pending, proposed amendments to TRID (81 FR 54318 ), it is also unlikely that the finalization of these amendments will be affected – but time will tell. If the CFPB finalizes them during a timeframe where they are still considered an independent agency (i.e. while its structural status is still being determined by Federal Courts), then according to OIRA, they will not be affected.
If, however, they are found to not be an independent agency, then a determination must be made as to whether the amendments are “new significant guidance or interpretive documents.” The CFPB has repetitively held that these amendments are not new, but rather “memorialize the Bureau’s informal guidance on various issues and include clarifications and technical amendments.” (81 FR 54318 )
All things considered, it is dubious that TRID and pending amendments to it will be affected by these Executive Orders at the current time. However, they could be modified or eliminated in the future, dependent upon how the Courts ultimately determine that the CFPB is structured and what Acts of Congress are passed into law.