Trump Aims to Help Businesses with 2-for-1 Regulatory Plan

President Trump signed an Executive Order on January 30, directing federal agencies to cut two regulations for every new one issued during the current fiscal year. The move is aimed at alleviating regulatory burden on both small and large businesses, Trump said while signing the order.

The order says that unless prohibited by law, an agency must identify at least two existing regulations to repeal each time that it proposes or finalizes a new regulation. “If you have a regulation you want—number one, we’re not going to approve it because it’s already been approved probably in 17 different forms, but if we do—the only way you have a chance is, we have to knock out two regulations for every new regulation,” he said.

Importantly, the order applies only to FY 2017, which ends September 30. That’s probably because Trump needs time to get his people in place, according to Burton J. Fishman, senior counsel with FortneyScott. “By the next fiscal year … new appointees will likely be in place to directly control the substance and number of federal regulation.”

Details of the Order

The order applies to more than just “regulations,” defining the term as “an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or to describe the procedure or practice requirements of an agency.”

Excluded, however, are regulations issued with respect to a military, national security, or foreign affairs function of the United States; regulations related to agency organization, management, or personnel; or any others exempted by the director of the White House’s Office of Management and Budget (OMB).

The order also addresses the cost of regulations. “[T]he total incremental cost of all new regulations, including repealed regulations, to be finalized this year shall be no greater than zero,” it says, “unless otherwise required by law or consistent with advice provided in writing” by OMB’s director.

Finally, it directs OMB’s director to provide guidance to agencies on various topics, such as estimating regulatory costs, determining what qualifies as new or offsetting regulations, and emergencies that might justify individual waivers of the order’s requirements.

Employer Takeaway

On his inauguration day, January 20, Trump also froze all pending regulations. He halted all unpublished regulations and extended—by 60 days—the effective date of those that had been published, but had not yet taken effect.

The move is typical of incoming administrations but, combined with the executive order, signals that the administration intends to halt as many regulations as possible, at least during FY 2017, Fishman said.

For some employers, particularly federal contractors, this could mean a reprieve from recent Obama administration mandates. “The regulations that are most susceptible to rescission are the ones promulgated under [E]xecutive [O]rders,” Fishman said. That may be a relief to small employers doing business with the government, he said. On the other hand, most large, multi-state contractors were probably already providing the benefits required by many of the orders even before they were issued, such as those setting minimum wage and paid leave requirements.

And other Obama initiatives were already on their way out: the “blacklisting rule” is probably already dead, Fishman noted, and the new EEO-1 requirements are likely to be changed by the new U.S. Equal Employment Opportunity Commission anyway. Regulations expanding overtime requirements also could be on Trump’s chopping block, but the administration may just withdraw its appeal of the injunction halting those rules, he noted.

Meanwhile, Fishman cautioned, the feasibility of Trump’s plan is unclear: “It remains to be seen whether and to what extent the specific elements of the two recent actions (extending existing effective dates, applying to already issued non-regulatory policy statements by independent agencies, repealing two regulations for every one issued, quantifying zero ‘total incremental cost’) can be achieved.”

At the very least, employers shouldn’t expect regulations identified for elimination to be repealed immediately. Regulatory changes—whether an agency is adding or removing requirements—require a notice-and-comment period, Fishman said. “It’s not just the wave of a pen.”