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Trump Administration Memorandum Imposes Regulatory Freeze Pending Review

January 25, 2017

On January 20, 2017, shortly after Donald J. Trump was sworn in as the nation's 45th President, Chief of Staff Reince Priebus executed and disseminated a Memorandum to the heads of every executive department and agency requesting all regulatory actions be stopped in their tracks. The Memorandum, entitled Regulatory Freeze Pending Review (the "Memorandum"), imposes an immediate freeze on all federal regulatory actions that have not yet come into effect. It further establishes a schedule for each such suspended action depending on its significance and where the particular action is situated in the regulatory pipeline. The Memorandum is clearly intended to provide sufficient opportunity for the President's new administration to review and make decisions about whether such regulations should move forward in whole, in part, or at all. 

The Memorandum applies to any substantive action by a department or agency that promulgates or is expected to lead to the promulgation of a final rule or regulation, any guidance document, and any statement of general applicability and future effect that sets forth a policy on a statutory, regulatory, or technical issue or an interpretation of a statutory or regulatory issue. With respect to all of these agency actions, the Memorandum sets forth the following: 

  1. A moratorium on sending any regulations as broadly defined in the Memorandum to the Office of the Federal Register (the "OFR") until a department or agency head reviews and approves the action. 
  2. The immediate withdrawal of all regulations that have been sent to the OFR, but not yet published in the Federal Register, for review by the appropriate department or agency head.    
  3. A 60-day postponement of the effective date of any regulations that have been published in the Federal Register but not yet taken effect. In addition, and where appropriate, the agencies should consider proposing for notice and comment a rule to delay the effective date beyond the 60-day period and potentially consider providing for further notice and comment on the regulation itself. Following the review, if it is decided that there are no substantial questions of fact, law or policy, the regulations would proceed. Where it is determined that a substantial question of fact, law or policy exists, the Office of Management and Budget (the "OMB") would be notified and further action could be taken in consultation with the OMB Director.   

Importantly, the Memorandum provides exceptions for certain regulations that are subject to statutory or judicial deadlines. In such cases, the appropriate department or agency head must notify the OMB Director as soon as possible. Department and Agency heads also have discretion to recommend to the OMB Director that other regulations be excluded from the freeze if they are believed to be "critical to health, safety, financial, or national security, or for some other reason." The Director would then make final determinations on whether the exception is appropriate. 

The Memorandum creates an opportunity for the newly seated Trump Administration to revisit highly controversial, but not yet formal, regulations and policy statements pushed out the door in the waning days and hours of the previous Administration. For the universe of regulations that may have already gone into effect, but are overly burdensome or otherwise objectionable, other avenues should be considered. These include use of the Congressional Review Act, where applicable, and pursuit of other specific legislative vehicles and/or regulatory approaches. Previous Presidents have adopted similar freezes when political transitions have occurred, but the Trump Administration is expected to use this tool to make sweeping changes to previous policy on a far broader scale.

Clark Hill attorneys are experienced in working with clients on effective strategies to address regulatory initiatives of this type.  

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