On January 20th, 2025, President Trump issued a “Regulatory Freeze” that in effect pauses all federal rulemaking activities until reviewed by his appointed officials. These regulatory freezes are a standard procedure that assist with transitioning power to a new administration. This process allows new leadership to assess and align pending regulations with their policy objectives and isn’t necessarily indicative of what might be to come.
The memorandum includes the following provisions:
- Pause on New Rules: Agencies are prohibited from proposing or issuing any rules until a department or agency head appointed by the President after January 20, 2025, reviews and approves the rule. Authority for review can be delegated to other presidential appointees, as permitted by law. Additionally, the Director (or Acting Director) of the Office of Management and Budget (OMB) may exempt any rule deemed necessary to address emergency or urgent situations.
- Immediate Withdrawal of Unpublished Rules: Any rules that have been sent to the Office of the Federal Register (OFR) which have not been published in the Federal Register must be withdrawn and reviewed as described in bullet point one above.
- Potential Postponement of Effective Dates: For rules that have been published in the Federal Register but are not yet effective, agencies should consider delaying the effective dates of the rule by 60 days from the date of the memorandum for “the purpose of for reviewing any questions of fact, law, and policy that the rules may raise.” During this time, agencies are also asked to consider opening a comment period for public input and to consider reevaluating pending petitions involving any such rule. To facilitate the review, agencies are asked to consider further delaying rules beyond the 60-day period as necessary.
- Post-Review of Postponed Rules: Regarding the postponement of rules discussed in bullet three, after a rule is reviewed and if no “substantial questions of fact, law, or policy,” exist, then no further action is required. However, if significant question arises, agencies should notify and take appropriate action in consultation with the OMB Director.
The term ‘rule’ generally encompasses any agency action that leads to the promulgation of a final rule or regulation – including notices of inquiry, advance notice of proposed rulemaking, and proposed rulemaking. Additionally, this includes any agency statement of general applicability that sets forth policy or interpretations of statutory or regulatory issues.
How this freeze ultimately impacts currently pending rules is unknown at the time of this publication. While it simply could reflect a routine procedural step for transitioning power to a new administration, many within the financial industry are hoping that this is a signal of a commitment to regulatory relief. However, at least conservatively, banks should continue to prepare for published compliance dates regardless of the potential that some of these rules may ultimately end up in the cold.