How Trump Administration May Affect Centre Law Clients

Trump Chief of Staff Will Issue “Regulatory Freeze” Direction (Alan Chvotkin)

It has become tradition when there is a change in party control of the White House for the new President’s chief of staff to issue a memorandum to all federal agencies on Inauguration Day to freeze any further action on new regulations until a department or agency head appointed or designated by the President reviews and approves the rules.^[1] This includes new rules, proposed rules, rules not yet in effect that can be withdrawn or suspended, and halting publication of rules that have not been published.  Given President-elect Trump’s focus on reducing regulations, it is almost guaranteed that his Chief of Staff will issue a similar “regulatory freeze” memo following the President-elect’s inauguration and swearing in of the White House staff.

In addition, as then President Trump did four years ago, it is almost guaranteed that he will issue an executive order imposing a requirement that federal agencies repeal two existing regulations before being able to implement one new regulation, among other actions, unless an exception is granted by OMB. This Executive Order is commonly referred to as the “2-for-1” rule.^[2] However, that Order does not apply to the independent regulatory agencies such as the Federal Trade Commission or the Federal Communications Commission.

In a second Executive Order,^[3] then President Trump set up mechanisms for implementing that initial Executive Order, as well as implementing other principles. Specifically, it created a Regulatory Reform Task Force at each agency, to be headed by a Regulatory Reform Officer, responsible for overseeing implementation of the president’s regulatory reform initiatives and policies.

Project 2025 (Barbara Kinosky)

The authors of Project 2025 have provided a roadmap of what Trump should accomplish during his term in office.  Although Trump disavowed all knowledge of Project 20025 during the election, the drafters of the document are considered close to Trump.  Among the numerous initiatives are:

• Increased foreign military sales to support U.S. allies by emphasizing exportability, ending informal congressional notifications, decreasing regulations such as some International Traffic in Arms Regulations (ITAR) regulations when dealing with close allies, and reforming the contracting process
• Elimination of many Environmental Protection Agency (EPA) rules and regulations governing emissions and a reduction of the EPA budget and federal contracting spend. During the first Trump Administration, EPA proposed cuts were 30%.

Elimination of Set-Aside Contract Preferences Based on Race (Barbara Kinosky)

Trump has proposed reevaluating and potentially removing certain SBA and similar programs that give contracting advantages based on race.  Trump has stated that SBA’s focus on aiding minority-owned businesses could be redirected to support small businesses based on economic need, regardless of race. This approach is consistent with recent legal actions funded by special associations trying to limit the use of race in federal contracting.

Challenges to Biden Presidential Executive Orders and Regulations Portend Issues for Trump Actions (Alan Chvotkin)

It is not surprising that many opponents of Executive Orders issued by President Biden and implementing and other policy regulations issued by executive agencies have been challenged in the federal courts.

We expect President Trump, and his appointed and designated executive branch officials, to aggressively take on the “regulatory state.”  However, based on recent court decisions interpreting the Administrative Procedures Act and the “Procurement Act,”^[4] the repeal of a regulation that is already in effect must follow the same regulatory path as was used to put the original regulation in place, thus at least slowing the pace of action.  We also expect numerous court challenges to significant regulatory actions by Trump officials to revise or repeal certain high-visibility regulations, such as environmental protection, civil rights, and immigration; this time these new opponents likely choosing to litigate in the rule-friendly Second and Ninth Circuits rather than the Fifth Circuit as opponents of President Biden’s actions have used.

Cybersecurity and Privacy (Brandon Graves)

Cybersecurity and privacy often get lumped together, but I think they will go in opposite directions in this administration.

First, CMMC will not slow down.  Although its origin goes back to 2010, the Department of Defense really began to move CMMC forward under the first Trump administration.  The official responsible for initially spearheading the effort was a Trump appointee and ran for Congress (unsuccessfully) as a Republican.

Second, cybersecurity is an important part of supply chain risk management (discussed below), and it provides a convenient excuse for all manner of protectionist policies.  If the Trump administration’s attempts to impose tariffs fails to find footing, increased cybersecurity requirements could serve some of the same purposes.

Third, news stories that China has stolen technology from the United States, based in fact or in fantasy, will encourage the Trump administration to take stronger actions to protect that technology, including cybersecurity requirements.

Privacy, however, will likely go the opposite direction, especially with the late increased influence of the tech sector.  The federal government really began to address privacy in a more modern, systematic way with the introduction of Revision 4 to NIST SP 800-53.  However, the general view of privacy, at least within the tech industry, has been of a tool that Europe has used to harm US companies.  The various Schrems cases in the EU have been held up as a prime example.

With the increased influence of certain parts of the tech sector on the Trump administration, it is likely that the federal government will place less emphasis on privacy controls.  We may even see some proposals to sell data collected by the government, even if implementation is doubtful.

Getting Export Licenses for International Clients Will likely Become More Difficult (Sudarsanan Sivakumar)

During the previous Trump Administration, the percentage of approved licenses rose to 17%, while denied license applications increased to 12.2%. With the second Trump term, the number of denied applications would likely increase, particularly for Chinese end-users. The U.S.-China trade war began during his earlier administration, with the U.S. aiming to limit China’s technological advancement, and this trend is expected to continue in the second Trump term. A more aggressive approach towards export controls and sanctions on China’s semiconductor industry is also likely.

There may not be an aggressive approach to Indian end-users. However, if India were to keep its high tariffs in place towards U.S.-origin commodities, a more severe tightening of export controls on advanced technology on top of retaliatory tariffs is not an unexpected outcome.  Alternatively, if India continues establishing a diversified supply chain, greater common ground can be anticipated between President Trump and Prime Minister Modi.

A Potential Reversal of Insourcing by the Federal Government (Barbara Kinosky)

Trump’s plans to reduce the “administrative state” might result in greater reliance on private contractors for federal services in some sectors while simultaneously shrinking those performing services in regulatory agencies. This could impact agencies such as NIH, CDC, EPA and DOE.

DEI and green initiative federal contracts at risk; spike in stop orders, non-renewals, and terminations likely (Lotus Bell)

We can expect the upcoming Trump administration to put Diversity, Equity, and Inclusion (DEI) and green initiatives federal contracts at risk. A spike in stop work orders, non-renewals, and terminations is a highly likely outcome for federal contracts supporting these kinds of programs.

During his previous term, President-elect Trump issued Executive Order (EO) 13950, which restricted federal contractors from conducting certain diversity training programs, which he labeled  “divisive” and “un-American.” President Biden revoked this EO in January 2021, but there’s still concern that similar policies will be reinstated, limiting DEI efforts among federal contractors. Many US corporations are already bracing for reductions in DEI initiatives, anticipating that the new Trump administration may set anti-DEI rules that federal contractors will have to meet to win or maintain government business.

Regarding federal green initiatives, the Trump administration previously rolled back numerous environmental regulations and withdrew from the Paris Climate Agreement. These actions demonstrated a clear prioritization of fossil fuel development over further investment in renewable energy. Additionally, during his 2024 campaign, President-elect Trump promised to dismantle President Biden’s climate policies, including that portion of the Inflation Reduction Act that offers an estimated $527 billion in tax incentives for low-carbon energy projects. If he is successful, this could lead to reduced federal support for environmental initiatives and a shift in federal agency funding priorities away from renewable energy programs.

Supply Chain (Brandon Graves)

Supply chain risk management has been a big point of emphasis for the federal government in recent years.  This figures to increase under the new administration.

The Federal Acquisition Supply Chain Security Act and resultant FAR clause provides the new Trump administration with a relatively easy way to exclude certain companies from the government supply chain.  That is an important tool; consider that last time you saw equipment from companies subject to the so-called “Section 889” exclusions, even commercially.

Aggressive supply chain risk management is consistent with President-elect Trump’s stated protectionist strategy.  We expect to see an expansion of the targeted companies lists as well as other ways to secure the supply chain.  This will mean more compliance tracking and reporting for offerors in the government contracting community.

Appropriations and Debt Ceiling Will Put the Squeeze on Spending – Particularly Civilian Agencies (Alan Chvotkin)

With the Continuing Resolution for the current Federal fiscal year 2025 due to expire on December 20, how the current Congress (and its future Senate Republican majority) and the Trump Administration will approach spending decisions will be key. While before the election House Speaker Mike Johnson said that the House would not pass an “omnibus” appropriations act or further CRs, the post-election reality may dictate another path. It is highly unlikely that the Congress will pass any of the twelve regular appropriations bills for the current fiscal year. To avoid a Christmas government shutdown, it is almost unavoidable that the Congress, the Biden Administration, and the incoming Trump administration will agree to adopt an extension of the Continuing Resolution at least through March 2025, if not longer, giving the new President time to get key budget officials in place and begin making budget adjustments to the Biden spending plan. And while “parity” been the defense and non-defense budgets has been the foundation for spending decisions over the past several years, it is almost assured that civilian agencies will not fare as well as defense spending from the new Congress and the Trump administration.

But an additional wild card will come into the mix in January 2025 with the reemergence of the debt ceiling cap, which was deferred as part of the budget and appropriations deal in 2013. The debt ceiling is a law that sets the maximum amount of money that the U.S. Treasury can borrow to pay its obligations. On January 1, 2025, the debt ceiling will be reestablished based on the amount of debt on that date; however, since the Federal Government will already be at that ceiling on New Year’s Day, Treasury will have to begin immediately to take well-tested “extraordinary measures” to manage both the government’s total obligations and the payment of interest and principal on current borrowing. Treasury has not yet announced how long it can continue to manage the debt ceiling by using these extraordinary measures. But a failure to address the debt ceiling could affect payments on existing federal contracts and the ability to award new contracts as available funds may have to be shifted from payments on contracts to federal employee payroll or interest payments on current borrowing. The Federal Government has never defaulted on its debt obligations nor failed to pay valid contractor invoices on time or in full.

^[1] See “Regulatory Freeze Pending Review,” Memorandum for Heads for Executive Departments and Agencies from Chief of Staff to President Biden, January 20, 2021, available at https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/regulatory-freeze-pending-review/ (last viewed Nov 12, 2024).

^[2]Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs, issued Jan 30, 2017, available at https://www.govinfo.gov/content/pkg/FR-2017-02-03/pdf/2017-02451.pdf (last viewed Nov 12, 2024.

^[3] Executive Order 13777, “Enforcing the Regulatory Reform Agenda,” issued February 24, 2017, available at https://www.govinfo.gov/content/pkg/FR-2017-03-01/pdf/2017-04107.pdf (last viewed Nov 12, 2024).

^[4] Formally known as the “Federal Property and Administrative Services Act”.