Description: President Trump issued an executive order on January 31, 2025, entitled “Unleashing Prosperity Through Deregulation.” The order:

• Requires every federal agency issuing a regulation to identify 10 potential regulations for recission, or to be eliminated and overturned.
• Tells all agencies that for Fiscal Year 2025 (which ends on September 30, 2025), the total incremental cost of all new regulations, including any repealed regulations, must be no greater than zero—unless otherwise required by law or consistent with written advice of the director of the Office of Management and Budget.
• Rescinds the Biden administration’s update to the document known as OMB Circular A-4, which provides guidance to all executive branch agencies about how to assess the desirability of proposed regulations, particularly with respect to how costs and benefits are measured.
• The executive order also incorrectly categorizes many forms of federal government materials and communications as “regulations,” including memoranda, guidance documents, and interagency agreements.

Impact:

Federal regulations, or rules, are written by agencies in order to actually carry out the specifics of laws that are passed by Congress. Regulations establish basic labor, consumer, environmental, and other protections, from workplace safety standards to clean water to the construction of roads and bridges. The language in the order is based on the mistaken premise that regulations hamper economic growth or harm the economy. On the contrary, the benefits of regulations consistently exceed their costs over time. Academic studies have also shown that regulations have a modestly positive or neutral effect on employment.

On the order’s directive to keep the costs of all new regulations at zero, aside from being effectively impossible to accomplish when issuing any regulation at all, as nearly every regulatory change represents some level of cost to come into compliance, all costs are not created equal. Compliance with rules is part of the overall cost of conducting business in a way that doesn’t cause harm to workers and the environment. Rules that, for example, establish safety requirements for employers to prevent workplace injuries provide great benefits to workers who would otherwise bear the costs of injury, through emergency room visits, medical bills, and absence from work.

The order’s recission of the updates to OMB Circular A-4 will have a tangible negative impact While very technical, this update was a much-need change, and meant that regulations could have become much more beneficial to low- and moderate-income households.

Most likely, this executive order is intended to significantly hamper agencies from creating and finalizing much-needed new regulations. However, in practice, as written, it is unlikely to result in any concrete policy action beyond the optics of a deregulatory agenda.