In February, President Donald Trump told a group of executives that "we don't need 75 percent of the repetitive, horrible regulations that hurt companies, hurt jobs." Trump made that comment while promoting his second executive order related to regulatory reform, which created task forces and specific officers within agencies who will focus on reducing the regulatory burden.

Trump's first executive order related to regulatory reform, signed in January, requires agencies to identify and eliminate two existing regulations for every one new regulation. In addition to signing these executive orders, Trump has repealed specific regulations -- most notably the Obama-era Stream Protection Rule. That repeal was seen as a victory for the coal-mining industry.

What has all of this accomplished for entrepreneurs?

It's hard to tell, but this specific approach to regulatory reform will likely add up to a big benefit for big business -- with limited impact to emerging industries and small businesses.

Why?

The two-for-one regulatory requirement does not inherently mean better, less, or weaker regulation. One bad regulation can substitute for two good regulations, and one strong regulation can take the place of two weak regulations.

The intended elimination of 75 percent of regulatory requirements is equally useless. That's like saying you'll lose weight by cutting out 75 percent of your caloric intake -- but not caring which 75 percent you'll cut. Surviving on fewer calories isn't healthier if all you consume is pizza rolls and Kool-Aid.

And the repeal of the stream rule? It might be helpful for coal-mining companies -- but even that is up for debate. Regarding its helpfulness to entrepreneurs and small businesspeople, that part really isn't debatable: I don't know anyone who is thinking of starting a coal mine.

But there is a way to approach regulatory reform that could be helpful to entrepreneurs, without the risk of overrunning our streams with three-eyed fish. The Trump administration should focus on creating a smart regulatory framework for high-growth, sustainable industries (in other words, the opposite of coal mining). In doing so, it could follow the example of recent developments related to regulations governing drones.

Christian Sanz, CEO of the drone imaging processing platform Skycatch, described how, until recently, the Federal Aviation Administration enforced dated, cumbersome regulations that anchored the drone sector. Sanz noted that in August 2016, the FAA acted strategically to develop a set of regulations known as Part 107.

The FAA cut some of the restrictions on drone companies -- for example, it now allows individuals without remote pilot airman certificates to operate drones under a certification holder's direct supervision -- and tailored other regulations to better fit the growing fleet of drones.

Sanz called the development of Part 107 a "watershed" moment for his industry.

"The FAA removed barriers to entry into the commercial drone industry," Sanz said, "but it still ensures safe flying."

Sanz's example illustrates actual regulatory reform, which involves the public and private sectors working together to balance the needs of entrepreneurs and the safety of the public. Eliminating regulation is also often discussed in terms of spurring innovation, but often regulatory reduction has nothing to do with innovation. In the coal industry, eliminating the stream rule will just allow coal mining to continue to shirk the full cost of doing business and keep coal artificially cheap -- which discourages the development of more sustainable and innovative alternatives.

Our country's regulatory framework is badly in need of reform. No reasonable person would argue otherwise. But the best approach to reform isn't to just blindly start cutting regulations -- just as the best way to lose weight isn't restricting your diet to 700 calories' worth of pizza rolls and Kool-Aid.

Published on: Jun 5, 2017