Mixed bag of legislative reform as US takes stock of Trump’s first year

The inauguration of Donald Trump one year ago led to a declaration by people connected with the new administration that 2017 would see significant progress on the legislative front that would lead to a major overhaul in tax, trade, infrastructure, health and investment amongst others.

Twelve months on, legislation has been passed on tax reform that also incorporated some healthcare provisions, but little else.

In late December, President Trump tweeted: “the Stock Market is setting record after record and unemployment is at a 17-year-low. So many things accomplished by the Trump Administration, perhaps more than any other President in first year. Sadly, will never be reported correctly by the Fake News Media!”

Others claim he has been largely inactive with tax reform representing the Administration’s only meaningful legislative victory. Both views contain elements of truth and are best explained through an outline of the workings of the US government.

The US government is specifically structured with three distinct branches to provide a system of checks and balances, Legislative, Executive and Judicial.

  • Congress (House of Representatives and Senate has the sole power to legislate for the United States on the Federal level. Legislation enacted by Congress must be signed into law by the President who can veto any law, which in turn can be overridden by a 2/3 majority in both Houses. Congress also has the power to remove the President or Presidential appointments for abuse of power. Congress also has oversight on a number of Federal bodies.
  • Executive power is vested in the President who is the Commander in Chief of the Armed Forces. He has power to make treaties and appointments to office “with the Advice and Consent of the Senate,” receive Ambassadors and Public Ministers, and “take care that the laws be faithfully executed”.
  • Courts check both the executive branch and the legislative branch through judicial review. Judges are appointed by the Executive branch and confirmed by the Senate.

The Presidential obligation to ensure that the laws be “faithfully executed” explains much of the disconnect.

Presidents have the ability to issue executive orders which are legally binding unless overturned by Congress. Executive orders cannot reverse a specific law passed by Congress and are more limited in scope, but can give clear direction and interpretation on executive policy.

Also, Presidential appointments oversee Federal Departments and Agencies that have relatively broad latitude in deciding which laws should be aggressively enforced and how they should be interpreted. Executive branch agencies publish regulations to clarify their interpretation of a law and how a law will be implemented. The past 12 months have seen significant loosening and significant reinterpretation of regulations on many levels, a process that is likely continue over the next 12 months and which has largely gone unnoticed as political pundits and analysts have been preoccupied with the President’s daily tweets.

Highlights of recent and pending regulatory change include:

Tax Reform

The Tax Reform and Jobs Act was signed into law on December 20, 2017 providing for a significant reduction in corporate taxes as well as incentives to repatriate funds held overseas.

Environmental Protection Agency 

President Trump stated that a major goal was to reduce government regulations and stated that for every new regulation, two would be repealed.  Nowhere has de-regulation been more pronounced that those concerning Environmental affairs and the EPA, where a wide range of changes were enacted including:

  1. Approval of the Keystone XL pipeline
  2. Approval of the Dakota Access pipeline
  3. A revoking of the requirement that federal agencies protect new federal infrastructure projects by building to higher flood standards.
  4. Removal of the three-year freeze on new coal leases on public lands pending environmental review.
  5. Removal of the requirement for oil and gas companies to report methane emissions.
  6. A revoking of the rule preventing coal companies from dumping mining debris into local streams.
  7. A repeal on the ban on offshore oil and gas drilling in US coastal waters except off the coast of Florida.
  8. A revoking of a 2016 order protecting the northern Bering Sea region in Alaska
  9. A repeal of an Obama-era rule regulating royalties for oil, gas and coal
  10. A withdrawal of guidance for federal agencies to include greenhouse gas emissions in environmental reviews
  11. A relaxation of the environmental review process for federal infrastructure projects putting a single federal agency in charge of navigating environmental reviews, instituting a 90-day timeline for permit authorization decisions and setting a goal of completing the full process in two years.
  12. Cancellation of payments to the Green Climate Fund ($3 billion pledged, $1 billion of which was already paid)
  13. Removal of a number of species from the endangered list
  14. A discouragement of the sale of plastic water bottles in national parks
  15. A row back an Obama-era order to consider climate change in managing natural resources in national parks
  16. A revoking of the directive for federal agencies to mitigate the environmental impacts of projects they approve
  17. Removal of copper filter cake, an electronics manufacturing byproduct, from the “hazardous waste” list
  18. Reversal of a proposed rule that mines prove they can pay for cleanup
  19. Withdrawal of a proposed rule reducing pollutants at sewage treatment plants
  20. Abolition of a ban on use of lead ammunition on federal lands
  21. Amended fishing regulations for a number of species and withdrawal of proposed limits on endangered marine mammals caught by fishing nets on the West Coast

Ongoing initiatives include: 

  1. The repeal of the Clean Power Plan which set limits on carbon emissions from existing coal- and gas-fired power plants. This will not be a full repeal, rather replacement of existing standards. There are also ongoing reviews of rules regulating coal ash waste and other discharge as well as emissions standards in general.
  2. Review of fuel-efficiency standards for cars and trucks
  3. Shrinking ten national monuments comprising over four million acres of land and several million square miles of ocean, including a proclamation reducing Bears Ears National Monument by 85 percent.
  4. Reviewing national marine sanctuaries and monuments designated or expanded within the past decade and potentially expanding commercial fishing.
  5. Potential rescinding of water pollution regulations for fracking industry
  6. Reviewing new safety regulations on offshore drilling. Provision in tax bill allows drilling in part of the Alaska reserve.
  7. Review of federal regulations on hunting methods in Alaska


The SEC has been relatively quiet in 2017, however this is likely to change in the coming months with two new members about to be appointed to the five-member board. Areas of focus are anticipated to be:

  1. Financial and Blockchain Technology, in particular trading in crypto/digital currencies.
  2. New regulations regarding issuance and supervision of ETFs, At present exemptions from the Investment Company Act of 1940 is required for each individual ETF
  3. Derivatives
  4. Revised fiduciary role replacing Department of Labor requirement for investment professionals advising on retirement investments to hold their client’s interest above their own.
  5. Potential postponement and revision of rule requiring investment management companies to adopt a liquidity risk management program beginning on December 1, 2018. The rule requires each fund to assess liquidity risk and classify assets into one of four buckets: highly liquid, moderately liquid, less liquid, and illiquid.

Under the Obama Administration, the Consumer Financial Protection Bureau (CFPB) was given significant oversight powers. President Trump has appointed Mick Mulvaney as the CFPB’s interim director. Mr. Mulvaney has been a consistent critic of the Bureau and is likely to significantly scale back its role and mission.

This year is also likely to see significant legislation relating to Dodd Frank to ease regulatory burdens on institutions with less than $10 billion in assets as well as easing the proprietary trading restrictions mandated by the Volker rule and changing the definition of Systematically Important Financial Institutions (SIFIs).

International Trade

The cornerstone of President Trump’s campaign was trade, including tariff imposition and the rejection of multilateral trade agreements. While there has been a definite change of focus, the US has left TPP, abandoned TTIP, initiated renegotiation of NAFTA and shifted emphasis to export promotion.

There also appears to be a focus on bi-lateral agreements. A deal with a post Brexit Britain will likely be high on the agenda.


Infrastructure was originally one of the pillars of the Trump agenda, but fell behind in the push for healthcare and tax reform. The President has indicated this is the next priority and that he is hoping for bipartisan support for a $1 billion plan that will reportedly allocate $200 billion to support private sector investment in otherwise marginal projects and continue the trend of reducing regulatory oversight. Treasury Secretary, Stephen Mnuchin, has indicated there will be opportunities for Foreign Investors. Details are expected to be announced in January 2018.


This is the area where many of President Trump’s base feel he may have the most lasting impact given the lifetime tenure of Federal Judges. The appointment of Neil Gorsuch to the Supreme Court has been the most visible achievement. However a record was set at the appeals court level where four times as many appointments were approved compared to the first year of President Obama’s term, and twice as many as the first year of President George W. Bush.

While the general trend has been towards significant deregulation, the Justice Department has taken an opposite approach towards legal use of marijauana for medical or recreational purposes. As of January 1, 2018 a total of 29 States and the District of Columbia allow the use of marijuana for medicianal purposes while 8 States (Alaska, Oregon, Washington, California,

Nevada, Colorado, Maine and Massachusetts) allow recreational use, however any use remains prohibited under Federal law. The Obama justice department had issued guidelines adopting a hands-off approach by deciding not to interfere with State laws while not changing the classification of marijuana as an illegal drug. This provided for significant investment in the industry in States where the use of marijuana has been legalized, however on January 4th Attorney General Jeff Sessions issued a memorandum directing a recission of previous guidance documents and directing all U.S. Attorneys to enforce the laws enacted by Congress and to follow well-established principles when pursuing prosecutions related to marijuana activities.

Specific guidelines have not been issued as to how the policy change will be enforced and it is not clear if people selling or using marijuana in States where it is legal under State law are now at risk of prosecution. The industry, however, appears to have been thrown into a state of flux and there is considerable unease amongst investors and financial service providers.