President Trump signed a new executive order on January 31, 2025, requiring federal agencies to eliminate ten existing regulations for each new one they introduce. The order aims to reduce the costs and complexity of federal regulations to foster economic growth, improve global competitiveness, and enhance the quality of life for Americans. Under the order, the total incremental cost of all new regulations in fiscal year 2025, including repealed ones, must be significantly less than zero.
The Director of the White House Office of Management and Budget (OMB) will ensure standardized measurement and estimation of regulatory costs. Ari Sonnenberg, Chief Marketing Officer and Partner at The Wagner Law Group, noted that “the cost to the Department of Labor for just three new regulations under the Trump Administration will be the elimination of 30 existing regulations.” This represents a shift from Trump’s 2017 order, which urged agencies to offset the costs of new regulations by removing existing ones, to have zero net regulatory costs. The executive order includes provisions that could exempt certain rules from coverage, particularly those representing a priority to the Trump administration.
These exemptions apply to rules related to military or foreign affairs functions, homeland security, or immigration. The OMB is also directed to exempt regulations that impose minimal private sector costs or are requested for exemption by specified top administration officials.
Mandate on cutting regulations
The stringent requirement could make agencies more hesitant to issue new rules, regulations, or guidance. Under the first Trump administration, agencies were asked to eliminate two regulations for each new one. The administration claimed they exceeded this goal, eliminating five and a half of the regulations for each one issued.
Former President Joe Biden revoked that order in 2021 shortly after taking office. Trump’s pick for OMB Director, Russell Vought, is undergoing the confirmation process. The Senate Budget Committee’s Republicans advanced Vought’s nomination but faced a boycott from committee Democrats demanding an open discussion.
Vought served as OMB Director during Trump’s first term and was a key architect of the controversial Project 2025 agenda. The new executive order could significantly impact federal agencies like the Department of Labor by making introducing new regulations without substantial cost-cutting measures challenging. The 10:1 ratio of regulation elimination to new regulation issuance highlights the administration’s commitment to reducing regulatory burdens, though it could face resistance and challenges in implementation.