Summary of the Executive Order Implementing the President’s Department of Government Efficiency Cost Efficiency Initiative – Mandatory Agency Review of Federal Contracts, Grants and Loans
On February 26, 2025, President Trump issued an Executive Order (EO), “Implementing the President’s ‘Department of Government Efficiency’ Cost Efficiency Initiative,” aiming to transform Federal spending related to covered Government contracts, grants and loans to ensure Federal spending is transparent. This order requires that agencies, in consultation with the Department of Government Efficiency (DOGE), immediately review all existing covered contracts and grants, and, where appropriate, either terminate or modify such contracts and grants. In this review, which must be completed within 30 days, agencies must prioritize the review of funds disbursed to educational institutions and foreign entities for review of waste, fraud and abuse.
What Covered Contracts and Grants are Subject to Review?
Covered contracts and grants include discretionary spending through Federal contracts, grants, loans and related instruments. Covered contracts and grants exclude direct assistance to individuals; expenditures related to immigration enforcement (including U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement in the Department of Homeland Security), law enforcement, the military, public safety and the intelligence community (including classified information or classified information systems); and other critical, acute or emergency spending, as determined by the relevant agency.
What Does this Review Mean for Contractors and Grantees?
This new EO indicates that the administration, acting through DOGE, will continue to increase its level of scrutiny of grants and contracts, resulting in more substantial cuts. Contractors and federal award recipients should be prepared to exercise their rights in the event of complete or partial termination of any agreements, especially with regard to financial recovery. This preparation involves understanding the termination provisions applicable to your agreements and having thorough documentation and justification of all costs incurred in support of work under each agreement.
You also should consider contingency planning in the event your contract is terminated. Your obligations under the federal Worker Adjustment and Retraining Notification (WARN) Act and state law equivalents may be implicated if you were to terminate employees who were working on the cancelled contract. With reductions in force, there also could be discrimination or retaliation issues depending on how you select employees for termination. You may have certain obligations under the Age Discrimination in Employment Act (ADEA), depending on those selected for termination. Understanding your responsibilities under these laws will help you better plan for responding to a cancellation.
Additional Requirements
Payment Justification Records. Each agency, in collaboration with DOGE, must build a centralized system to record every payment (including those for federally funded travel) issued by the agency pursuant to its covered contracts and grants, along with a written justification by the agency employee who approved the payment. These written payment justifications must be publicly posted, subject to some exceptions.
New Guidance. Going forward, agencies must issue guidance on signing new contracts or modifying existing contracts. Agencies may approve new contracts prior to the issuance of such guidance on a case-by-case basis.
Credit Card Freeze. All credit cards held by agency employees are frozen for 30 days from the date of this order, subject to limited exceptions.
Real Property Disposition. Within seven days, agencies must provide confirmation to the Administrator of General Services that the Federal Real Property Profile Management System is up to date and reflects a complete and accurate inventory of the agency’s real property. Within 30 days, each agency must identify all termination rights under existing leases of government-owned real property and, in consultation with DOGE and the Administrator of General Services, determine whether to exercise such rights. Within 60 days, the Administrator of General Services must submit a plan to the Director of the Office of Management and Budget (OMB) for the disposition of government-owned real property which each agency deemed as no longer needed.
Healthcare Preview for the Week of: March 3, 2025 [Podcast]
Attention Turns to Government Funding
Last week, after some drama on the floor, the House passed its version of a budget resolution in a 217 – 215 vote, a week after the Senate passed its “skinny” resolution. For the reconciliation process to move forward, the chambers must work together to agree on an aligned resolution, which is likely to include Medicaid reforms.
Reconciliation will move to the background for these next two weeks as Congress shifts its focus to government funding. The continuing resolution (CR) passed in late December 2024 funded the government through March 14, 2025. The CR also included healthcare extenders, such as Medicare telehealth flexibilities, disproportionate share hospital payments, and the hospital at home waiver, but they have an expiration date of March 31 (read more on the full list of extenders here). Republican lawmakers are debating the length and scope of the next government funding package, which could be a “clean” CR to fund the government through the remainder of fiscal year 2025. If public statements are accurate, spending cuts related to Department of Government Efficiency efforts may not be pursued in this immediate government funding package. House Republicans will likely need votes from Democrats to pass a CR, so all eyes are on the outline of this package.
In his first congressional address since returning to the White House, President Trump will head to Congress on Tuesday night to deliver an address to a joint session of Congress. Like a state of the union, the address will likely focus on Trump’s agenda for his next four years, including actions on immigration, tariffs, extending tax cuts, and reducing the government’s footprint. While healthcare is not anticipated as a feature of the speech, Trump could discuss his executive orders on healthcare price transparency, Make America Healthy Again, and gender-affirming care for youth, and could lay out additional healthcare agenda priorities. Sen. Elissa Slotkin (D-MI) will provide the Democratic response.
The Senate will continue with nomination hearings this week. The Senate Health, Education, Labor, and Pensions (HELP) Committee will hold back-to-back hearings for National Institutes of Health (NIH) director nominee Jay Bhattacharya, MD, on Wednesday and US Food and Drug Administration commissioner nominee Martin Makary, MD, on Thursday. Sen. Warren (D-MA), although not on the HELP Committee, sent both nominees letters requesting confirmation that they would not lobby for the industries they would regulate for four years after leaving office. Similar topics are likely to be brought up during the hearings. Bhattacharya’s hearing will also likely focus on the recent NIH guidance capping indirect costs for research grants and his views on research transparency and NIH structure reform. Later this week, the Medicare Payment Advisory Commission will meet and discuss various topics, including draft recommendations to reform the physician fee schedule and reduce cost-sharing for outpatient services at critical access hospitals.
Today’s Podcast
In this week’s Healthcare Preview, Debbie Curtis and Rodney Whitlock join Julia Grabo to discuss the state of the government funding package ahead of the March 14 deadline.
Regulated Entities: It’s Time to Play Love It or Leave It with Federal Regulations
Amidst the flurry of Executive Orders (“EOs”) that tends to accompany any new administration, one EO may have flown under the radar. But for the regulated community—which, these days, includes most businesses in some form or another—this EO could be both a source of opportunity and of angst.[1]
EO 14219, titled “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative” (the “Deregulation EO”), was issued on February 19.[2] Consistent with the president’s long-stated goal to streamline and minimize federal agency regulation, the Deregulation EO sets forth a series of directives to federal agencies aimed at reducing regulations and minimizing the administrative state. This client alert summarizes the Deregulation EO and opines on the opportunities for the regulated community to seek reform or deregulation, on the one hand, or to prioritize existing or new regulations, on the other.
The Deregulation EO
The Deregulation EO directs all agency heads to review their existing regulations within 60 days for consistency with law and the administration’s policy aims, in conjunction with the Department of Government Efficiency (“DOGE”) and the Office of Management and Budget (“OMB”), and, as necessary, the Attorney General. The agencies are required to identify for deregulation their regulations that fit within any of seven categories:
Those that are unconstitutional or those that raise serious constitutional questions, such as the scope of power vested in the federal government by the Constitution:
This category is aimed at regulations that exceed the power of the federal government;
Regulations that are based on unlawful delegations of legislative power:
This category stems from the constitutional Nondelegation Doctrine, which has seen renewed interest in recent years by courts and commentators.[3] The Nondelegation Doctrine is the principle that Congress cannot delegate its legislative or lawmaking powers to other entities—including Executive Branch agencies. Historically, to pass constitutional muster, when Congress did delegate to an agency, it was required to do so by providing “intelligible principles” to the agency to guide it in its rulemaking—a relatively lax standard. But in recent years, the Nondelegation Doctrine seems poised to grow some teeth;
Regulations that are based on anything other than the best reading of the underlying statute:
This category aligns with the Supreme Court’s decision last term in Loper Bright that overruled the Chevron doctrine—the principle that if an agency’s interpretation of an ambiguous statute was reasonable, even if not the best reading, the reviewing court should defer to the agency. In Loper Bright, the Court held that reviewing courts should not defer to an agency’s interpretation of an ambiguous statute, but may only view such interpretations as persuasive[4];
Those that implicate matters of “societal, political, or economic significance that are not authorized by clear statutory language”:
This principle appears aimed at the “major questions doctrine,” announced in 2022 by the Supreme Court’s decision in West Virginia v. EPA, 597 U.S. 697. There, the Court held that an agency may not resolve through regulation a question of “vast economic and political significance” without a clear statutory authorization;
Regulations that impose significant costs on private parties that are not outweighed by public benefits;
Those that harm the national interest by “significantly and unjustifiably impeding technological innovation, infrastructure development, disaster response, inflation reduction, research and development, economic development, energy production, land use, and foreign policy objectives”; and
Regulations that impose undue burdens on small business and impede private enterprise and entrepreneurship.
These last three categories appear to be aimed at the business interests this administration has expressed an intention to prioritize. The directive to conduct such a comprehensive review of existing regulations and sort them into the categories listed above could be a significant undertaking for agency heads and staff, who may be simultaneously working on directives under other EOs and adjusting to the realities of reduced personnel. And as such, there may be opportunities for affected businesses to provide input, as addressed below.
The Effect of the Deregulation EO
Upon the expiration of the 60-day review period, the Office of Information and Regulatory Affairs (“OIRA”) is directed to consult with the agency heads to develop a “Unified Regulatory Agenda” to rescind or modify any regulations agencies have identified as fitting within the seven categories. In other words, the agencies are directed to deregulate, to the extent their existing regulations fall within any of these seven classes.
Further, the Deregulation EO stresses that agency heads should deprioritize regulatory enforcement of any regulations that “are based on anything other than the best reading of the statute” or those that go beyond the powers of the federal government (classes (1) and (3) above). Agency heads, in consultation with OMB, also are directed to review ongoing enforcement proceedings on a case-by-case basis and to terminate those that “do not comply with the Constitution, laws, or Administration policy.” While it might initially seem that agencies would be reluctant to categorize their own regulations into the categories mentioned in the EO (e.g., unconstitutional; based on unlawful delegations of legislative power; based on other than the best reading of the underlying statute), new personnel within various agencies are likely bringing different perspectives about existing regulations, and may have specific ideas already about the particular regulations that they believe should be rescinded.
Finally, the Deregulation EO directs agencies to promulgate new regulations, consistent with the process set forth in EO 12866 for submitting new regulations to OIRA for review, and to consult with DOGE about such new regulations. OIRA is directed to consider the factors set forth in EO 12866 as well as the seven principles set forth in the Deregulation EO. The Deregulation EO also directs the OMB to issue implementation guidance as appropriate.
Takeaways for the Regulated Community
Many businesses are subject to federal regulation, in some capacity. While the EO does not contemplate involvement by the regulated community in the 60-day review of agency regulations, nothing prevents affected industries from taking the apparent opportunity that now exists to identify and offer perspective to particular agencies and/or to OIRA about specific regulations that are problematic to their business, whether because of costs, technical compliance difficulties, or policy differences, and explaining why a regulation fits into one of the seven categories outlined in the Deregulation EO. [5]
Furthermore, if a business is subject to an ongoing enforcement proceeding (or the threat of one), the administration directive that agencies terminate such proceedings on a case-by-case basis provides a similar opportunity for companies to convey their thoughts to the relevant agency about the lawfulness and/or priority goals of the regulation at issue in that proceeding.
On the other hand, if there are regulations that are particularly beneficial to a given industry, or in which significant time or capital has been invested to further compliance, the industry may want to ensure these regulatory schemes are preserved. For these regulatory schemes, businesses may also want to reach out to the relevant agency proactively to explain why such regulations are consistent with the Deregulation EO, in an attempt to avoid the uncertainty or costs that could accompany any roll back.
While the EO does not clarify whether the coming deregulation process will follow the standard notice and comment rulemaking process of the Administrative Procedure Act—which requires a notice of proposed rulemaking in connection with the repeal of an existing regulation—that process will afford further opportunity for industry to submit comments on any regulations that an agency intends to repeal.
The Loper Bright, Corner Post, Jarkesy, and Ohio v. EPA cases demonstrate that a changing administrative state brings both opportunities and risks.[6] Staying proactive in addressing the regulatory regime applicable to a company’s industry is the best way to “take the bull by the horns”—whether that is in an effort to jettison existing, burdensome regulations, or to retain efficient, functional regulations.
Download This Alert
[1] See, e.g., Estimating the Impact of Regulation on Business | The Regulatory Review.
[2] Available at Ensuring Lawful Governance and Implementing the President’s “Department of Government Efficiency” Regulatory Initiative – The White House
[3] E.g., Move Over Loper Bright — Nondelegation Doctrine Is Administrative State’s New Battleground | Carlton Fields
[4] Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024).
[5] Nb. There presently are various legal challenges to many of the administration’s EOs, so any action by a regulated entity should be carefully considered (perhaps in conjunction with the relevant agency) to withstand an Administrative Procedure Act or other legal challenge.
[6] Legal Experts to Lay Out Recent SCOTUS Decisions’ Impact on Business – PA Chamber
The New Enforcement Landscape Under the Trump Administration’s Executive Orders
President Trump’s executive orders, signed on January 20, 2025, have significantly altered the immigration enforcement landscape. Key changes include:
Declaring a national emergency at the southern border
Expanding enforcement priorities to include broader categories of removable immigrants
Increasing Immigration and Customs Enforcement (ICE) presence for more worksite enforcement operations
Revoking federal funding from jurisdictions not complying with federal immigration laws
These actions signal a renewed focus on worksite enforcement, with increased audits, raids, and stricter penalties for I-9 violations. Employers must be prepared for unannounced visits that could disrupt operations and potentially lead to employee detentions in light of the Trump administration’s recent executive orders on immigration enforcement, ICE, and the Fraud Detection and National Security (FDNS) unit of U.S. Citizenship and Immigration Services (USCIS). The following guide outlines critical steps employers should take to ensure I-9 compliance, E-Verify compliance, and prepare for potential site visits.
I-9 Compliance Guide
The cornerstone of immigration compliance for employers is proper completion and maintenance of I-9 forms. Here are the essential steps to ensure I-9 compliance:
1. Timely Completion
Ensure Section 1 is completed by the employee on or before the first day of employment.
Complete Section 2 within three business days of the employee’s start date.
2. Document Verification
Physically examine documents presented by employees to establish identity and work authorization.
For E-Verify participants, ensure that List B documents contain a photograph.
3. Record Keeping
Retain I-9 forms for all current employees and for terminated employees as required by law.
Store I-9 forms securely, separate from other personnel records.
4. Regular Audits
Conduct internal audits of I-9 forms to identify and correct errors.
Consider using electronic I-9 systems to streamline compliance and reduce errors.
5. Training
Provide comprehensive training to HR personnel on I-9 compliance requirements.
Ensure staff understands proper completion, storage, and retention of forms.
E-Verify Compliance Guide
To prepare for a potential E-Verify site visit, employers should take the following compliance steps:
1. Account Maintenance
Ensure at least one program administrator is listed on the E-Verify account.
Keep the company profile up to date.
Verify all users have completed required tutorials, including refresher training.
2. Documentation and Record-Keeping
Maintain organized and secure storage of all I-9 forms and E-Verify records.
Be prepared to present all information originally submitted with E-Verify petitions.
Ensure List B identity documents have a photo.
3. Correct Records, as Needed
As per the E-Verify User Manual, if an employer discovers they inadvertently failed to create a case by the third business day, they should bring themselves into compliance immediately by creating a case for the employee. However, this applies to recent hires, not long-term employees.
The E-Verify User Manual goes on to say, “Do not create a case for an employee whose first day of employment is before the effective date of the employer’s MOU.”[1] As such, for employees who have been with the company for a while, submitting an E-Verify case long after their start date is generally not recommended.
4. Workplace Notifications
Clearly display E-Verify Notice of Participation and Right to Work posters in English and Spanish.
Consider displaying posters digitally, online, or providing copies with job applications.
5. Training and Preparation
Ensure all staff involved in I-9 verification are well-trained and up to date on procedures.
Conduct regular internal audits to identify and correct any compliance issues.
Consider having an attorney conduct an external audit to preserve privilege.
Preparing for Site Visits
With the increased possibility of ICE or FDNS site visits, employers should take proactive steps to prepare:
1. Develop a Written Response Protocol — create a comprehensive plan that outlines:
Designated points of contact for handling site visits;
Steps for verifying the identity and authority of visiting agents;
Procedures for notifying legal counsel and management; and
Guidelines for employee interactions with agents.
2. Designate and Train Key Personnel
Appoint primary and alternate contacts familiar with immigration compliance.
Ensure these representatives are prepared to greet inspectors and facilitate the visit.
Train front-line employees on how to respond to agent arrivals.
3. Know Your Rights and Limits
Understand the difference between administrative and judicial warrants.
Be aware that ICE agents cannot enter private areas without a valid judicial warrant or consent.
Clearly mark and designate private areas within your workplace.
4. Prepare Documentation
Maintain organized and easily accessible I-9 records.
Keep copies of visa petitions, Labor Condition Applications, and other relevant immigration documents for foreign national employees readily available.
Consider creating a “compliance binder” with key information about your organization and employees.
5. Educate Employees
Inform employees about their rights during a site visit, including the right to remain silent and request legal representation, and the right to refuse to sign documents without legal advice.
Provide “Know Your Rights” cards to employees, which are available in multiple languages.
Conduct mock site visits to train/familiarize staff with procedures and teach them how to best respond to inquiries politely and assertively.
During a Site Visit:
If ICE or FDNS agents arrive at your workplace, follow these steps:
Verify Credentials: Ask to see and record the agents’ identification and badge numbers.
Review Warrants: If presented with a warrant, carefully review its scope and validity.
Contact Legal Counsel: Immediately notify your designated legal representative.
Limit Access: Only provide access to areas and documents specified in a valid warrant (for ICE visits) or (in FDNS visits) documents, information, and interviews related to information that was provided in an immigration benefits filing for a foreign national worker.
Document the Visit: Take detailed notes of all interactions, including questions asked and answers provided.
Accompany Agents: Do not leave agents unattended in your workplace.
Maintain Calm: Encourage employees to remain calm and professional throughout the process.
Post-Visit Actions
After a site visit, take the following steps:
Debrief with legal counsel and the management team.
Review notes and documentation from the visit.
Address any compliance issues identified during the inspection.
Consider conducting a full I-9 audit, if not recently completed.
Reinforce training for employees based on the visit experience.
Potential Consequences and Penalties
Employers should be aware of the increased penalties for I-9 violations in 2025:
Type of Violation
Old Fine
New Fine
Substantive Form I-9 violations (minimum)
$281
$288
Substantive Form I-9 violations (maximum)
$2,789
$2,861
Knowingly employing undocumented workers – 1st order
$698–$5,579
$716–$5,724
Knowingly employing undocumented workers – 2nd order
$5,579–$13,946
$5,724–$14,308
Knowingly employing undocumented workers – subsequent
$8,369–$27,894
$8,586–$28,619
Document fraud – 1st order
$575–$4,610
$590–$4,730
Document fraud – subsequent order
$4,610–$11,524
$4,730–$11,823
Prohibition of indemnity bonds
$2,789
$2,861
Further, E-Verify participation may be terminated and employers will be reported to agencies that investigate illegal employment activities if E-Verify finds evidence of misuse, abuse, discrimination, and/or fraud.
These steep penalties underscore the importance of maintaining strict compliance with immigration laws and being prepared for potential site visits.
In Conclusion
As the enforcement landscape evolves under the new administration, employers must prioritize I-9 compliance and preparation for potential site visits. By implementing robust compliance programs, training staff, and developing clear response protocols, businesses can mitigate risks associated with immigration enforcement actions.
Remember, while cooperation is generally advisable, employers also have rights during these visits. Balancing cooperation with protection of your business interests is crucial. By staying informed, prepared, and proactive, employers can navigate this challenging environment while maintaining compliance.
[1] “MOU” refers to the E-Verify Memorandum of Understanding for Employers.
Environmental Law Monitor: Navigating the Shifts in Environmental Policy and Law Under the Trump Administration [Podcast]
On this episode of the Environmental Law Monitor, Daniel Pope and Taylor Stuart discuss the shifting landscape under the new Trump administration, comparing regulatory actions and priorities with those of previous administration, and delve into the complexities of NEPA regulations, endangered species and the impact of political changes on environmental legal practice. They explore how these transitions will affect legal practitioners and the energy sector and speculate on what to expect in the coming months.
Episode Highlights
[2:50] The Trump Administration’s Approach to NEPA: Taylor and Daniel discuss the significant actions from the Trump administration impacting environmental law, namely the Council on Environmental Quality’[JP1] s action to remove NEPA regulations from the Code of Federal Regulations. They briefly review the current state of NEPA and its impact on federal agencies.
[9:05] The Impact of Federal Workforce Downsizing on Environmental Law Space: Environmental legal practitioners will likely see a shift in their day-to-day work, particularly if they communicate often with agencies. Taylor expects to see an uptick in citizen lawsuits by NGOs challenging Trump’s administrative actions.
[12:51] The Trump Administration’s Efforts to Roll Back Environmental Regulations: Taylor and Daniel discuss the current administration’s positions on the Good Neighbor Rule and the Endangered Species Act, litigation surrounding these regulations/rules and the complexities around overturning them.
[24:28] Trump 2.0 vs. Trump 1.0: Compared to the first administration, the second Trump administration is much more prepared to carry out its environment agenda. Taylor expects to see progress on and clarity around energy and environmental issues, especially given the administration’s prioritization of energy independence.
Connecticut Bill Addresses “Shrinkflation”
The Connecticut legislature is considering an anti-price-gouging bill (House Bill 6856) that would add new disclosure requirements for food companies that adjust product sizes without price changes (a practice referred to as “shrinkflation”).
If passed, the bill would require companies to “provide a clear and conspicuous notice” for at least 12 months when they reduce the “quantity, amount, weight, or size of a product” without adjusting the price. The bill applies to “essential groceries covered by federal Supplemental Nutrition Assistance Program (SNAP) regulations, including baby formula, bread, cereals, dairy products, meats and fish, non-alcoholic beverages, seeds, and snacks.” The language excludes retailers and establishments, like restaurants, that “primarily sell food to the public for consumption.”
According to Connecticut Attorney General William Tong, “[a]lthough companies must update their labels to reflect product size changes, they are not currently required to advertise that they have made a change. Since the pandemic, price sensitive consumers have started to notice these changes—for example when they open their favorite box of crackers or bag of chips only to realize that the box or bag is only half full. This leaves consumers feeling deceived and like they are receiving less value for their hard-earned dollars.”
If passed, Connecticut would be the only state in the US to explicitly address shrinkflation.
Alabama Eyes Portable Benefits for Freelancers and Gig Workers
Certain states have considered enacting legislation facilitating the creation of portable benefit accounts for independent contractors, including gig economy workers. These accounts attach to the individual worker rather than a specific employer, allowing them to pay for various expenses such as health benefits, income replacement insurance, life insurance, and retirement benefits. Alabama may join Utah as one of the first states with portable benefits by way of Senate Bill (SB) 86, which was introduced on February 4, 2025, by Alabama Senator Arthur Orr (R).
Quick Hits
Alabama Senator Arthur Orr introduced a bill on February 4, 2025, to create portable benefit accounts for independent contractors.
The bill proposes that independent contractors open portable benefit accounts managed by providers, with contributions from hiring parties being optional and incentivized through state tax deductions.
If passed, the new law will take effect on October 1, 2025.
Under Alabama’s proposed Portable Benefits Act, an independent contractor must first open a portable benefit account. A “portable benefit account provider,” such as an investment management firm, and/or a technology provider or program manager that offers services through a bank or investment management firm, would administer the plan.
The “hiring party,” defined as “[a] person or entity who hires or enters into a contract for the performance of work with an independent contractor,” could contribute to the independent contractor’s portable benefit account in two ways:
From its own funds, or
Withholding a percentage of the independent contractor’s compensation, if the independent contractor agrees to such withholding in a signed agreement.
According to the bill, any contributions made by the hiring party to the portable benefit account “shall not be used as a criterion for determining a worker’s employment classification.”
Under SB 86, contributions to the portable benefit account are not mandatory. The legislation provides incentives in the form of Alabama state tax deductions. Specifically, the bill states that a hiring party that uses its own funds to contribute to a portable benefit account may deduct 100 percent of that amount as a business expense on its yearly Alabama tax return. SB 86 further provides that independent contractors may deduct “100 percent of the amount contributed by a hiring party as a form of compensation to a portable benefit account,” as well as 100 percent of the amount contributed by the worker, as an adjustment to income on the individual’s Alabama state income tax return.
If passed, the proposed “Portable Benefits Act” would take effect on October 1, 2025.
President Trump Addresses EB-5 Green Card Program and Proposes New Gold Card Immigration Program
On Feb. 25, 2025, President Trump announced that he will seek to end the U.S. EB-5 Immigrant Investor Program, which provides foreign investors with permanent residency in the United States. The EB-5 program requires a foreign national to invest in U.S. businesses that create 10 or more jobs per investor. The program has an investment amount of $1,050,000 that can be reduced to $800,000 if the investment is made in a high unemployment area, rural area, or through a government infrastructure project. Investors and their dependents are able to attain U.S. citizenship after five years of permanent residency.
Trump’s announcement aims to replace the EB-5 visa with a “Gold Card” program, which the president stated would require an investment of $5 million and that would grant “green card plus benefits,” including a path to citizenship, which the EB-5 program already provides. No further details were given, although in his announcement he noted that a detailed plan would be published in the next two weeks. According to the president, the goal is to attract wealthy people to the United States that would create businesses and help reduce the country’s deficit.
However, the president does not have the authority to ignore or override an act of Congress, including the Immigration and Nationality Act. Congress is given the authority to pass immigration laws that control admission, exclusion, and naturalization. This power is based on the Constitution’s Article 1, Section 8, Clause 18, which gives Congress the power to make laws that are necessary and proper to carry out the Constitution’s power. Likewise, the Supreme Court has ruled that Congress has “plenary” power over immigration, which means that Congress has almost complete authority over the passage of immigration laws. In 2022, Congress reauthorized the EB-5 program through Sept. 30, 2027, with the passage of the EB-5 Reform and Integrity Act. The president does not have authority to strike down an act of Congress, including the existing EB-5 program. Likewise, Congress has exclusive control over the allocation of employment based green card numbers and any change to that would need to be done by amending the Immigration and Nationality Act. The president can propose new immigration legislation, but only Congress can make new laws and amend existing laws. The president also has the authority to enforce immigration laws through agencies like U.S. Citizenship and Immigration Services, U.S. Immigration and Customs Enforcement, and U.S. Customs and Border Protection. Any attempt to strike down the EB-5 program may be met with immediate judicial action to enjoin and strike down any such proposal.
U.S. Moving Forward With Tariffs on Canada, Mexico Imports and Increasing China Tariffs
On Feb. 27, President Donald Trump announced to the press while in the Oval Office that he intends to move forward with the implementation of 25 percent tariffs on imports of goods from Canada and Mexico.
On Feb. 21, the White House published an Executive Order announcing the imposition of 25 percent tariffs on goods imported from Canada and Mexico. Two days later, President Trump reached a deal with the presidents of Canada and Mexico to delay the tariffs for a month pending talks on new border control measures. The goal/speculation was that during that window, deals would be reached with both countries to avoid the imposition of tariffs.
However, President Trump announced that he would be moving forward with the tariffs, effective March 4, 2025, on both countries due to them not doing enough to stop the flow of drugs into the U.S.
When the tariffs were announced on Feb. 1, both Canada and Mexico announced that they would be imposing retaliatory tariffs on imports of goods from the U.S. With the U.S. moving forward with tariffs on both countries, we expect them to impose tariffs on goods from the U.S. in the coming days.
Additional Tariffs on China
On Feb. 1, the White House published an Executive Order announcing 10 percent tariffs on imports of goods from China, citing national security concerns. However, on Feb. 27, President Trump announced an additional 10 percent tariff on imports of goods from China, which would also go into effect on March 4. China has already announced retaliatory tariffs on the imports of goods from the U.S.; with the doubling of the tariffs on goods imported from China, we expect China to retaliate even further on goods coming from the U.S.
Drugs are still pouring into our Country from Mexico and Canada at very high and unacceptable levels. A large percentage of these Drugs, much of them in the form of Fentanyl, are made in, and supplied by, China.
www.nytimes.com/…
President Trump Orders Investigation on Effects of Copper Imports on National Security
On Feb. 25, the White House announced it will launch an investigation into the importation of copper under Section 232 of the 1962 Trade Expansion Act.
President Donald Trump signed an Executive Order instructing the U.S. Secretary of Commerce to commence an investigation into the national security impact on the import of copper in all forms. The investigation is to review the effects of imports of copper in all forms on national security, including:
Raw mined copper
Copper concentrates
Refined copper
Copper alloys
Scrap copper
Derivative products
Copper is one of the products the president had promised to impose tariffs on, in addition to aluminum and steel; 25 percent tariffs were announced on Feb. 10 on aluminum and steel).
The Executive Order instructs the Commerce secretary to assess the factors outlined in the federal law that calls for “domestic production for national defense; impact of foreign competition on economic welfare of domestic industries” to include:
(i) the current and projected demand for copper in United States defense, energy, and critical infrastructure sectors;
(ii) the extent to which domestic production, smelting, refining, and recycling can meet demand;
(iii) the role of foreign supply chains, particularly from major exporters, in meeting United States demand;
(iv) the concentration of United States copper imports from a small number of suppliers and the associated risks;
(v) the impact of foreign government subsidies, overcapacity, and predatory trade practices on United States industry competitiveness;
(vi) the economic impact of artificially suppressed copper prices due to dumping and state-sponsored overproduction;
(vii) the potential for export restrictions by foreign nations, including the ability of foreign nations to weaponize their control over refined copper supplies;
(viii) the feasibility of increasing domestic copper mining, smelting, and refining capacity to reduce import reliance; and
(ix) the impact of current trade policies on domestic copper production and whether additional measures, including tariffs or quotas, are necessary to protect national security.
The Executive Order was made pursuant to Section 232 of the Trade Expansion Act, which mandates the investigation must conclude within 270 days.
Far-Reaching Implications
If, after the conclusion of the investigation, tariffs are imposed on copper and its derivative products, it would have far-reaching supply and cost implications. Copper and its derivatives are in a wide variety of everyday products, such as electronic products, wiring, construction items, just to name a few.
“Like our steel and aluminum industries, our great American copper industry has been decimated by global actors attacking our domestic production,” said Commerce Secretary Howard Lutnick.
www.reuters.com/…
A United States Sovereign Wealth Fund: First Impressions
On February 3, 2025, President Donald Trump issued Executive Order 14196 (the “EO”) directing the Secretary of the Treasury and the Secretary of Commerce, in coordination with the Assistant to the President for Economic Policy, to develop a plan for the establishment of a United States sovereign wealth fund. With the aim of promoting the “the long-term financial health and international leadership of the United States,” Treasury Secretary Scott Bessent called the creation of a US fund an issue “of great strategic importance” that President Trump foresees becoming one of the largest in the world. “The Saudi Arabia fund is on the larger side,” noted President Trump, “but eventually we’ll catch it.”
This GT Advisory analyzes the EO, considers the place of a US sovereign wealth fund within the architecture of the United States Government, and explores the fund’s likely purposes, sources of funding, investment thesis, potential structure, and important governance and other operational considerations.
Click here to read the full GT Advisory.
McDermott+ Check-Up: February 28, 2025
THIS WEEK’S DOSE
House Passes Budget Resolution. The Senate and House must now align on a unified resolution for the reconciliation process to begin in earnest.
Senate Holds Nomination Hearings for OSTP Director, FTC Commissioner, OMB Deputy Director. Discussion focused on nominees’ views on artificial intelligence, pharmacy benefit managers (PBMs), and the impact of paused federal funding on grants and healthcare programs.
Senate HELP Committee Advances Secretary of Labor Nominee Chavez-DeRemer. Lori Chavez-DeRemer received some bipartisan support, and a full Senate vote is expected next week.
House Energy & Commerce Committee Advances Oversight Plan. The markup turned highly partisan as Republicans put forth an agenda that includes biological threat preparedness and response, substance use, and Medicare and Medicaid operations.
House Energy & Commerce Health Subcommittee Holds Hearing on PBM Reform. Members agreed on the need for PBM reform and referenced work from the 118th Congress.
Senate Aging Committee Examines Opioid Epidemic. Members discussed varying policy approaches to combatting opioid use disorder among seniors.
President Trump Signs Healthcare Price Transparency EO. The executive order (EO) directs agencies to increase enforcement of healthcare price transparency regulations.
Trump Administration Issues Memo Requiring Federal Agencies to Submit RIF Plans. Among a number of directives, the memo directs agencies, including the US Department of Health and Human Services (HHS), to submit phase one of a reduction in force (RIF) plan for their federal workforce by March 13.
HHS Issues Policy Statement on Notice-and-Comment Rulemaking. It remains unclear what scope of rules could be impacted by this statement.
CONGRESS
House Passes Budget Resolution. On February 25, the House voted 217 – 215 to advance its version of a budget resolution to outline the reconciliation process. In a dramatic display of how quickly things can change, the vote was initially cancelled because of ongoing opposition from Reps. Burchett (R-TN), Davidson (R-OH), Spartz (R-IN), and Massie (R-KY) due to concerns that the resolution did not include enough spending cuts. With only a one-seat margin, Republicans couldn’t proceed with that much opposition. However, three of the representatives were convinced to change their votes moments after the vote had been cancelled, and the vote proceeded. Ultimately, all Democrats voted no, and Rep. Massie was the sole Republican to join them.
The resolution would enable a single reconciliation bill to tackle immigration, energy, defense, and temporary extension of tax cuts from the first Trump administration. The resolution directs the House Energy & Commerce Committee to find at least $880 billion in savings, which could include significant Medicaid cuts.
The House vote follows the Senate’s vote last week to advance its version of a “skinny” budget resolution that did not include tax policy and would therefore include less healthcare savings. With two options for how to proceed on reconciliation, the House and Senate now must negotiate a unified budget resolution and pass it through both bodies in order for the reconciliation process to begin. Those budget negotiations will proceed mostly behind the scenes, as Congress must turn its attention to funding government before the March 14 deadline.
Senate Holds Nomination Hearings for OSTP Director, FTC Commissioner, OMB Deputy Director. The Senate Committee on Commerce, Science, and Transportation held a nomination hearing for Michael Kratsios to serve as the director of the Office of Science and Technology Policy (OSTP) and for Mark Meador to serve as a commissioner for the Federal Trade Commission (FTC). Members questioned Meador about FTC investigations into PBMs and consolidation, and Meador noted his intent to ensure competition in the healthcare industry. Members questioned Kratsios about guardrails for artificial intelligence, and he expressed his view that artificial intelligence can make a positive impact on healthcare.
The Senate Homeland Security & Governmental Affairs Committee held a nomination hearing for Dan Bishop to serve as deputy director of the Office of Management and Budget (OMB). Discussion predominately focused on border security and federal workforce cuts. Health-related topics included the impact of paused federal grant funding on rural hospital operations, federal funding of abortions, and transparency of federally funded research. Bishop will next testify before the Senate Budget Committee on March 5, and both committees must vote on his nomination before it heads to the Senate floor.
Senate HELP Committee Advances Secretary of Labor Nominee Chavez-DeRemer. In a 14 – 9 vote, the Senate Health, Education, Labor, and Pensions (HELP) Committee advanced the nomination of Lori Chavez-DeRemer as secretary of labor to the full Senate. Sens. Hassan (D-NH), Hickenlooper (D-CO), and Kaine (D-VA) voted yes, and Sen. Paul (R-KY) joined the remaining Democrats to vote no. Chavez-DeRemer previously represented Oregon’s fifth district in the House, and Sen. Paul expressed concern about her cosponsorship of a bill that would have made unionization easier. The US Department of Labor shares jurisdiction over certain healthcare issues with HHS, including the Affordable Care Act, the Health Insurance Portability and Accountability Act, and employer-sponsored insurance. A vote is expected next week on the Senate floor, where Chavez-DeRemer could continue to receive bipartisan support.
House Energy & Commerce Committee Advances Oversight Plan. During the markup, members discussed the committee’s oversight and authorization plan for the 119th Congress. Each House committee must submit such a plan to the House Administration and Oversight and Government Reform Committees by March 1. The plan states that the Energy & Commerce Committee will conduct oversight of federal agencies’ efforts on biological threat preparedness and response, ensure cost transparency in Medicare and Medicaid, examine the cost of chronic diseases, and examine government cybersecurity initiatives.
The markup became quite contentious, with Democrats offering numerous amendments that would require the committee to study the impact of any cuts to Medicaid and federal research funding, examine layoffs at HHS, and assess the US Food and Drug Administration’s leadership on vaccine development and safety. All amendments offered by Democrats were rejected along party lines.
House Energy & Commerce Health Subcommittee Holds Hearing on PBM Reform. There was strong bipartisan support during the hearing for PBM reform. However, Democrats expressed frustration that such policies were already fully debated in the 118th Congress and included in the December 2024 bipartisan healthcare package that was ultimately dropped from the year-end continuing resolution. Republicans indicated that they would like to investigate fraud and abuse within the drug supply chain and examine the PBM rebate model, and they noted concern about how PBMs harm independent pharmacies. Democrats also referenced the $880 billion in savings directed at the Energy & Commerce Committee in the House budget resolution, noting their concern over any cuts to Medicaid.
Senate Aging Committee Examines the Opioid Epidemic. The hearing focused on opioid use disorder’s impact on older Americans and featured a panel of local law enforcement and elected officials, caregivers, and subject matter experts. Witnesses recommended a variety of policy solutions, including taking a stronger law enforcement approach against drug dealers, increasing access to treatments such as medication-assisted therapy, and eliminating the Medicaid inmate exclusion. Democrats noted that decreasing Medicaid funding would impact access to and coverage of substance use disorder treatment, while Republicans focused on strengthening border security to prevent opioid use disorder.
ADMINISTRATION
President Trump Issues Healthcare Price Transparency EO. The EO, Making America Healthy Again by Empowering Patients with Clear, Accurate, and Actionable Healthcare Pricing Information, aims to build on the first Trump administration’s efforts to increase the transparency of healthcare prices. It specifically references a 2019 Trump EO and subsequent regulations that required hospitals and plans to publicly disclose negotiated prices. The Biden administration expanded on those regulations, but there have been reports of hospital non-compliance.
Differing from previous hospital price transparency requirements, the 2025 EO states that prices should be “actual prices” and not estimates. This EO directs the US Departments of the Treasury, Labor, and HHS to “rapidly implement and enforce” healthcare price transparency regulations within 90 days, including by:
Requiring disclosure of prices of items and services, not estimates;
Issuing updated guidance or proposed regulatory action to ensure pricing information is standardized and comparable across hospitals and plans; and
Issuing guidance or proposed regulatory action to update enforcement policies designed to ensure compliance.
A fact sheet can be found here.
Trump Administration Issues Memo Requiring Agencies to Submit Federal RIF Plans. The memo comes in response to President Trump’s February 13 EO, “Implementing the President’s ‘Department of Government Efficiency’ Workforce Optimization Initiative.” The memo directs federal agencies to initiate large-scale RIFs and submit an agency RIF and reorganization plan (ARRP) as phase one of the initiative by March 13. The memo notes that ARRPs should seek to achieve:
Better service for the American people;
Increased productivity;
A significant reduction in the number of full-time-equivalent positions;
A reduced real estate footprint; and
A reduced budget outline.
Phase two of the initiative will focus on creating more productive, efficient agency operations. Agencies must submit a phase two plan by April 14, with implementation by September 30. Agencies or components that provide direct services to citizens (such as Social Security, Medicare, and veteran’s healthcare, according to the memo) are not to implement any proposed ARRPs until the OMB and Office of Personnel Management certify that the plans will have a positive effect on the delivery of such services.
HHS Issues Policy Statement on Notice-and-Comment Rulemaking. The Administrative Procedure Act (APA) exempts certain rules from formal notice-and-comment rulemaking, including rules regarding “public property, loans, grants, benefits, or contracts.” Despite this exemption, past guidance (known as the Richardson Waiver) encouraged greater public participation and directed government agencies to still use the more formal rulemaking process for this category of rules. HHS issued a new policy statement on February 28, stating that it will rescind the Richardson Waiver, and “matters relating to agency management or personnel or to public property, loans, grants, benefits, or contracts, are exempt from the notice and comment procedures of 5 U.S.C. 553, except as otherwise required by law. Agencies and offices of the Department have discretion to apply notice and comment procedures to these matters but are not required to do so, except as otherwise required by law.” The scope of the rules that could be impacted by this change are not easily defined, even under caselaw, and would need to be reconciled against other statutes and legal requirements that may still require notice-and-comment rulemaking.
QUICK HITS
Senate Judiciary Committee Advances the HALT Fentanyl Act with Bipartisan Vote. The HALT Fentanyl Act, S. 331, would permanently classify fentanyl-related substances as schedule I controlled substances, align penalties for offenses involving these substances with those for fentanyl analogues, establish a new registration process for certain research, and make other changes to research registration requirements. The legislation, which passed the House with bipartisan support in early February, advanced from the committee by a vote of 16 – 6.
Energy & Commerce Committee Privacy Working Group Issues RFI. The newly formed working group is exploring the potential creation of a federal comprehensive data privacy and security framework. The request for information (RFI) focuses on artificial intelligence, data security, enforcement, and existing privacy frameworks. Responses are due by April 7.
MACPAC Holds February 2025 Meeting. The Medicaid and CHIP Payment and Access Commission (MACPAC) meeting included discussion on transitions of care for children and youth with special healthcare needs, hospital supplemental and directed payments, self-directed home- and community-based services, access to opioid use disorder medications, Section 1115 substance use disorder demonstrations, prior authorization, healthcare for children in foster care, and access to residential care for children and youth with behavioral health needs.
CMS Announces Medicare Drug Price Negotiation Program Public Engagement Events. The events, held from April 16 to 30, will allow patients, clinicians, caregivers, and consumer and patient organizations to share input for the second cycle of Medicare drug price negotiations. More information can be found here. Read about the drug selection process in an infographic here.
Congressional Democrats Raise Concerns Over HHS Layoffs. Senate Finance Committee Ranking Member Wyden (D-OR) and Senate HELP Committee Ranking Member Sanders (I-VT) sent a letter to HHS expressing concern over the layoffs of probationary employees working on organ transplantation modernization efforts. House Energy & Commerce Committee Ranking Member Pallone (D-NJ) and Health Subcommittee Ranking Member DeGette (D-CO) raised concerns over the impact of layoffs at the Centers for Disease Control and Prevention, National Institutes of Health (NIH), and Food and Drug Administration (FDA).
HHS OIG Report Finds Increased Medicare Part D Spending for Weight Loss Drugs. From 2019 to 2023, spending increased by 364% for 10 medications, including anti-obesity medications such as Ozempic, that are covered as type 2 diabetes treatments. The report follows a proposed rule from the Biden administration that would allow Medicare Part D to cover certain anti-obesity medications for weight loss purposes; it remains unclear whether the policy will be finalized under the current administration.
NEXT WEEK’S DIAGNOSIS
Congress will be in session next week. With a budget resolution passed in both chambers and next steps in flux, discussion will likely shift to funding the government, which must be addressed by March 14 in order to avoid a government shutdown. The Senate will continue to hold nomination hearings. On March 5, the Senate HELP Committee will hold its hearing for NIH director nominee Jay Bhattacharya, and the Senate Budget Committee will hold its hearing for OMB deputy director nominee Dan Bishop. On March 6, Senate HELP will hold its hearing for FDA commissioner nominee Martin Makary. President Trump will give the joint address of his second term to Congress on March 4. The Medicare Payment Advisory Commission will meet March 6 and 7.