LEVICK | January 15th, 2021

What to expect as the clock approaches midnight

Big data and analytics risk firm Delve shares a list of last-minute regulatory changes being finalized by federal agencies that will have implications long past President Trump’s departure on January 20th.

These last two months of the Trump Administration have been very different than what the country is accustomed to seeing during a presidential transition period, with serious and weighty issues at hand when it comes to the peaceful transition of power that is a cornerstone of our democracy. While industries and public affairs professionals continue to monitor the developments of this past week, they must also be aware of last-minute regulatory changes being finalized by federal agencies that will have implications long past President Trump’s departure on January 20th.

These so-called “midnight rules” are typical of outgoing administrations, and set the debate for key industry sectors going into the next presidential term, even if they end up being suspended, challenged, or rolled back in what we’ve previously referred to as “the next match of regulatory ping pong.” Across a wide range of sectors, here’s what public affairs professionals  need to know to prepare for these rules:

Environmental Issues: The Trump Administration has made a concerted effort over the last four years to roll-back Obama-era regulatory burdens on the energy industry that were aimed at addressing climate change. These efforts have continued during the Administration’s final days, with the Environmental Protection Agency this week finalizing a Scientific Transparency Rule that limits the type of research the agency can use by “giv[ing] greater consideration to studies where the underlying dose-response data are available in a manner sufficient for independent validation.” The EPA also recently codified changes to the Clean Air Act that takes the economic impact of proposed regulations into greater consideration and has declined to increase soot emission regulations, despite pressures from environmentalist organizations.

Energy Policy: In a move to capitalize on domestic production of natural gas, the Energy Department finalized a rule that clarifies the department does not need to conduct reviews under the National Environmental Policy Act before approving LNG export facilities. However, not all of the Administration’s last-minute rules are welcome news for the oil and gas industry. Following a court decisionputting the existing Nationwide Permit (NWP) 12 in jeopardy, the U.S. Army Corps of Engineers is set to finalize a rule updating the Nationwide Permit program, splitting out oil and gas infrastructure from other utility infrastructure that previously used NWP 12 for Clean Water Act permitting. According to analysts at ClearView Energy Partners, the decision to split pipelines may make it easier for the Biden Administration to remove oil and natural gas pipelines from the NWP program altogether.

Healthcare: As we noted in our last TL;DR, the Trump Administration recently finalized the Most Favored Nations rule in an attempt to lower drug prices. However, a United States District Court has already issued a nationwide injunction on the order that was set to go into effect on January 1st. While the Administration faced a setback on this rule, it is still trying to lock in what it has already done to reform Medicare and the Affordable Care Act (aka Obamacare). In an effort to cement its legacy of cutting regulatory red tape, the Department of Health and Human Services is currently considering a proposed sunset regulation that would set expirations on new and existing HHS regulations. This would require a review of the regulations ten years after they are put in place and ensure they remain properly constructed and have not proven overly burdensome to the economy.

Labor And Employment: Independent contractors were thrust into the national spotlight the past two years as California passed Assembly Bill 5 to reshape the gig economy and Californians passed Proposition 22 to exempt many workers from that reshaping. On Wednesday, the U.S. Department of Labor issued a final rule clarifying what constitutes a an employee versus an independent contractor, relaxing the Fair Labor Standards Act’s definition if favor of an “economic reality” test that examines two “core factors” to determine what meets the standard of an independent contractor.

Financial Services: In another significant ruling, the Department of Labor has made it more difficult for pension managers to consider anything other than financial factors when it comes to choosing investments, an effort aimed at discouraging environmental and social impact considerations that recently became popular among financial institutions in response to public interest in social impact. Meanwhile, the Office of the Comptroller of Currency has been aggressively trying to finalize the Fair Access to Financial Services rule that would block banks with more than $100 billion in assets from “red-lining” politically disfavored industries such as gun manufacturers and oil companies.

The incoming Biden Administration has already vowed to issue a memo on Inauguration day freezing or delaying any midnight regulations the Trump Administration has put forward. Incoming White House spokeswoman Jen Psaki specifically said the Administration will target Labor’s independent contractor rule, stating that “if it takes effect, the rule will make it easier to misclassify employees.” Beyond the power of the pen, President-elect Biden also will now have the ability to utilize the Congressional Review Act (CRA) thanks to his party’s victories in Georgia’s U.S. Senate runoff elections earlier this week. CRA allows Congress to review and reverse recent (de)regulation efforts, and could leave public affairs professionals and industry leaders scrambling to both ends of Pennsylvania Avenue trying to reduce the uncertainty around which rules will survive. As the current Administration winds down and the new one takes office, the research and monitoring teams at Delve stand by to ensure you have an information advantage.