Donald Trump will return to the Oval Office to a newly transformed administrative state, as he tests executive branch powers to bulldoze federal regulations and remake agencies in his second term.
But changes to the administrative state, stemming from landmark Supreme Court rulings, including one overturning the longstanding Chevron deference doctrine, may subject his regulatory actions to legal challenges on new grounds, lobbyists and lawyers said.
“This will be the first presidential administration since the overturning of Chevron deference, and the new administration has to figure out does this hamper them as they start plotting out their first 100-day agenda,” said Republican lobbyist Ozzie Palomo, a founder of Chartwell Strategy Group. “There’s a big question mark there.”
The precedent gave deference to federal agencies when they craft regulations using vaguely written laws. The court has chipped away at regulators’ power in other cases, too, making it easier for industry groups to challenge labor, environmental, health care, and other matters.
Even as Republicans and industry groups largely celebrated the overturning of Chevron deference, their policy opponents in advocacy groups and on Capitol Hill may well try to use the ruling in their own fights against the incoming administration’s effort to dismantle regulations from the Biden era and beyond, arguing that regulators are going beyond their authority.
“Any legal tool is fair play,” said Lisa Gilbert, co-president of Public Citizen, a watchdog group that favors strict government regulations. “We will be looking for grounds to protect Biden-era and other regulations.”
The incoming Trump administration may find itself constrained in rewriting some regulations, in part because of the ruling in Loper Bright Enterprises v. Raimondo, which overturned Chevron, said Rich Gold, who leads the public policy and regulation group at Holland & Knight.
“Loper Bright doesn’t care whether you’re a Democratic administration or a Republican administration,” Gold said.
What matters is whether an administration’s interpretation of a vague statute can pass the muster of a judge trying to determine if an agency is following Congress’ directives or going beyond its authority.
Senate In Step
With a Republican-controlled Senate, Trump will count the chamber as an ally in his deregulation push. The Loper Bright decision will require lawmakers to draft legislative text with greater specificity, something that a closely divided Congress may struggle to achieve. The House remains too close to call, but Republicans are leading.
“What it’s ultimately going to do is put a lot more authority in the hands of Congress, which, by the way, is where it should be. They’re the ones who are supposed to be actually making the laws. They’re, you know, accountable to the people,” said Matt Mowers, a former Trump administration official, in a recent interview on CNN.
The incoming Trump administration said it will scrutinize regulations across the federal government, including those dealing with labor, environmental, and financial services.
Corporations and industry lobbying groups likely will welcome many of the regulatory rollbacks, though the moves are sure to inject new uncertainty for the business sector, at least in the near term.
Trump is eager to undo or loosen federal regulations and red tape as part of a project that billionaire Elon Musk, CEO of
The incoming Trump administration is expected to reverse Securities and Exchange Commission regulation for cryptocurrency. Financial regulators also are unlikely to restart implementing regulations under Basel III, an international framework that includes capital requirements.
Trump’s Environmental Protection Agency may decide not to continue defending legal challenges to Biden-era regulations including those for greenhouse gas emissions.
His Labor Department likely would cancel a Biden administration rule allowing investment plans to consider environmental, social, and governance factors. It also would likely move to rescind rules on independent contractor classification, overtime pay eligibility, and apprenticeships that were issued to cancel or supersede policies from Trump’s first term.
Agency Ping Pong
Trump’s plans to roll back regulations may draw legal challenges, but his administration may switch from formal rule-makings to issuing more informal guidance to make the changes. Those actions may be harder for opponents to challenge, lawyers and lobbyists said.
Tonnie Wybensinger, head of government relations at the Small Business Investor Alliance, said she expects the new Trump administration to provide “regulatory relief” for the financial services industry, without needing to litigate.
“This doesn’t mean there’s an end to regulation,” Wybensinger said. After Loper Bright and other decisions, lawmakers can write legislation that still defers to agencies, she said. “Just because industries or companies don’t like the outcome of a rule doesn’t mean it’s challengable.”
Kent Lassman, president and CEO of Competitive Enterprise Institute, which favors deregulation, said he expects fewer formal rule-makings and instead more guidance in the form of letters, memoranda, advisory opinions, circulars. Lassman dubs those work-arounds the “soft power” of the regulatory state.
To avoid a “ping pong effect,” where agencies flip and flop depending on which party wins the White House, Trump and Congress would need to move legislation, he said.
“If they want to do things that are durable for the long term, they’re going to have to build support in Congress,” he added.
Rebecca Rainey in Washington also contributed to this story.
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