President Issues Executive Orders to Curb Regulation
Candidate Trump promised to make deregulation a priority of his second term in office. By the end of day one, President Trump had signed a stack of some 200 Executive Orders (EOs), many of which were to restore policies that he initiated during his first term but had been extinguished by Executive Orders signed on day one of President Biden’s term.
Although there is much for the business community to celebrate in the EO stack, history will attest that EOs often live a short life.Though lacking longevity, at their best, EOs can break inertia, get the ball rolling and perhaps energize a stagnant Congress to exercise their constitutional role in making codified law.
With every change in administration comes new policy, new direction, and with that comes new faces at governmental agencies. By Inauguration Day many agency heads had already resigned. The political pendulum swings.
In this issue of Best Practice, we focus on several Executive Orders that will have a meaningful impact on both publicly traded and privately held businesses.
A freeze on new regulations issued by regulatory agencies.
This executive order applies to all federal agencies, but for businesses, the most pronounced regulatory relief may be at the SEC. Under the previous leadership, the SEC aggressively issued new regulations often in new areas that critics complained were beyond its jurisdiction.
Trump’s Executive Order, named “Regulatory Freeze Pending Review”, prohibits all executive departments and agencies to “propose or issue any rule in any manner, including by sending a rule to the Office of the Federal Register (the “OFR”), until a department or agency head appointed or designated by the President after noon on January 20, 2025, reviews and approves the rule.”
The Executive Order calls for the agencies to “Immediately withdraw any rules that have been sent to the OFR but not published in the Federal Register, so that they can be reviewed and approved” with certain exceptions. Any rules that have been published in the Federal Register but have not gone into effect may be postponed for 60 days, pending review.
This Order includes the revocation of 78 EOs issued by the previous administration between January 2021 and January 16, 2025. For publicly traded companies, most impactful is the revocation of the May 20, 2021, Executive Order 14030 “Climate-Related Financial Risk”, which paved the way for the SEC to propose and approve far-reaching ESG rules affecting all SEC registrants, regardless of where the company was domiciled.
The SEC approved new ESG rules on March 6, 2024 that required US-listed public companies to disclose in their financial statements Scope 1 emissions– described as direct greenhouse gas emissions (GHG) generated by the company, and Scope 2 emissions, which refer to disclosures about a company’s indirect emissions from purchased energy. The SEC hit a pause button on rule implementation in April 2024, as it fought lawsuits filed against it in six different Courts of Appeals which cited SEC agency overreach and challenged the SEC’s authority to impose the rules.
For a full read of Trump Executive Order please see:
This order names 15 new Chairs and Acting Chairs of various Agencies. A notable appointment is SEC Acting Chair Mark Uyeda, who replaces Gary Gensler who resigned on January 20th.
Uyeda, a Republican appointee, was sworn in as an SEC Commissioner in June 2022 and was a vocal opponent of the SEC’s Climate Disclosure Rule. In commenting on the approved climate disclosure rules at an “SEC Speaks” Conference in April 2024, Uyeda said that the SEC “acted on its own volition,” in adopting “a climate disclosure rule that seeks to exert societal pressure on companies to change their behavior. It is the Commission that determined to delve into matters beyond its jurisdiction and expertise.” He added “this action deviates from the Commission’s mission and contravenes established law.”
The SEC’s five Commissioners consist of a balance of Democrat and Republican appointees, with the majority shifting according to the party in power. Hester Pierce, a Republican appointee, is expected to remain at her post. Biden appointee Jaime Lazarraga resigned from his post days before the inauguration. This leaves Caroline Crenshaw, who joined the Commission in 2020, as the lone remaining Democrat appointee. Crenshaw voted to approve the March 6, 2024 Climate Disclosure rules, and said the Commission should have included Scope 3 emissions disclosure requirements which would have required companies to report on greenhouse gas emissions from throughout their supply chain internationally.
Other notable Agency Chair appointees include Brenda Carr (Federal Communications Commission), Mark Christie (Federal Energy Regulatory Commission), Marvin Kaplan (National Labor Relations Board) and Andrew Ferguson (Federal Trade Commission).
Federal Agency Chair appointments can be viewed at:
The continued expansion of the IRS workforce was halted when Trump signed this Executive Order, which puts a “freeze on the hiring of Federal civilian employees, to be applied throughout the Executive Branch.”
As part of this freeze, no Federal civilian position that is vacant at noon on January 20, 2025, may be filled, and no new position may be created except as otherwise provided for in this memorandum or other applicable law.” The order “does not apply to military personnel of the armed forces or to positions related to immigration enforcement, national security, or public safety.” The freeze is in effect for 90 days to allow time for the Office of Management and Budget to submit a plan to reduce the government’s size, at which time the freeze will be lifted for most agencies.
At the IRS, the hiring freeze will remain in effect beyond the 90 days until the new Treasury Secretary has had time to review. “This memorandum shall remain in effect for the IRS until the Secretary of the Treasury, in consultation with the Director of OMB and the Administrator of USDS, determines that it is in the national interest to lift the freeze,” according to the Order.
Under IRS Commissioner Danny Werfel, who resigned on Inauguration Day with two years remaining on his term, the IRS received nearly $60 billion in additional funding under the Inflation Reduction Act of 2022. Those funds were to be used to hire 88,000 new IRS agents as part of the IRS’s “modernization plan”.
For a full read of this Executive order, please see:
DISCLAIMER:
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
