With great trepidation that this column will become immediately obsolete or at least very dated in the short time from submitting it to publication, I want to address the whirlwind of regulatory relief announcements from the new Trump Administration. The newly minted, and not even fully staffed, administration has issued orders freezing all regulations in process. Adding further intrigue, it includes a requirement that for every major new regulation an agency proposes, it must also propose rolling back two older, outdated regulations. All these initiatives are designed to remove barriers holding back U.S. economic growth. A Cato Institute report last summer quantified the drag on the American economy as $1.2T in lost economic opportunity.
The clear majority of the previous administration’s regulatory agenda is now under needed scrutiny. Numerous regulations have no justification other than to hinder certain sectors of the economy. Many others have little or no scientific foundation or are based on faulty cost-benefit analysis. Even more have been shoved through the process without the benefit of even cursory review by impacted stakeholders. The new administration is correct in focusing on stopping and rolling back these regulatory excesses.
For bakers, there will be many benefits of rolling back or modernizing unneeded and unjustified environmental, labor and financial regulations. However, there are a few areas where a more thoughtful and judicious approach needs to be taken. For instance, many of the regulations to fully implement the 2010 Food Safety and Modernization Act (FSMA) have yet to be implemented. Despite that, the industry is working diligently to implement the requirements of the law. There are several operational areas that should be examined to determine if there is a more effective or efficient way to achieve the same goals.
Another area requiring careful thought is the recently approved Nutritional Facts Label and the recently enacted GMO Labeling law. These labeling changes create a delicate juxtaposition that if not handled properly could lead to costs exceeding $100M for bakers. ABA is aggressively pursuing compliance deadlines for these regulations that align with enough time for bakers to adequately prepare. Specifically, ABA and our food industry partners are asking for a five-year uniform deadline. This borrows from previous traditional practice by the FDA.
ABA also has asked the FDA to move quickly to reconsider its ill-conceived declarations on fiber and added sugar. ABA is working closely with its fiber supplier members to provide relief and clarity so that bakers can move forward with higher fiber products to meet consumers’ needs. At a recent meeting with top FDA officials, ABA stressed that the agency has an obligation to clean up the turmoil it caused in the fiber community. It appears that FDA did not account for the ramifications of its actions in meeting an arbitrary deadline of the Obama White House. It remains unclear what impact the new Administration’s regulatory relief initiatives will have on reversing the fiber guidance.
Congress also is making a significant run at costly regulations pushed through in the final months of the Obama Administration. Congress is poised to exercise the Congressional Review Act (CRA) to rescind more than a dozen of these regulations ranging from the DOL Fiduciary Rule to the Federal Contractor “Blacklisting Rule”. Up until now, the CRA had only been used to rescind the Clinton Administration’s Ergonomics regulation promulgated by OSHA.
There is talk of potentially utilizing the CRA to address several food and nutrition related regulations. Great care must be taken with the CRA as it is the nuclear weapon of regulatory rollback. Not only does it allow Congress to kill a regulation by a simple majority vote, it prohibits the impacted agency from bringing forth a similar regulation in the future.
As I write this, we are in week 3 of the new Trump Administration and it has already been a frenetic pace on a wide range of areas, none greater than regulatory relief. When the baking industry’s leaders gather for the ABA Convention in late March, I wonder how much else will be under the regulatory relief microscope.