Legislative Uncertainty Calls for Vigilance

The change in administrations raises multiple questions and the need to stay-up-to-date with potential business implications. This Business Matters column also appears in the February print issue of Ethanol Producer Magazine.
By Joe Leo | January 18, 2017

At the start of a new year, clients frequently ask what they should focus on from a legal perspective. This year, more than others, represents a time of uncertainty due to the significant shift in power at the federal level.

Legislative uncertainty will likely continue throughout 2017. With a new administration that assumed office in January, along with a different balance of power in Congress, there are likely to be significant legislative and regulatory changes that take effect throughout the year. However, if someone tells you they know what legislative changes to expect in 2017 and when those changes will be implemented, I would ask them for their crystal ball. While even casual observers expect there will be changes, some of which may be radical departures from prior laws and regulations, the focus of the new administration and Congress and the speed with which they will implement these changes is unknown. As a result, vigilance is key to keeping abreast of these changes. The most significant changes will likely be in the areas of employment law, tax reform, environmental regulations and healthcare, though it is anyone’s guess as to which areas will be the initial focus of the Trump administration. Each of these areas will have an impact on the ethanol industry. Some may be welcome additions, including the potential for greater market access for ethanol and reduced environmental compliance burdens. However, there is always a risk that the renewable fuels standard (RFS) and other key market access legislation may be changed or abandoned. 

It is anticipated that the Trump administration will have a very different view of employment laws compared to the Obama administration. Recently, a federal court in Texas issued a temporary injunction that blocked implementation of the Department of Labor’s new federal overtime rules scheduled to take effect Dec. 1. The federal overtime rules were a key initiative of the Department of Labor under the Obama administration, but will not likely be a priority of the Trump administration. Further, I would expect that other employment-related laws will be a key focus of the new administration and will likely lead to new rules for employers. 

Tax reform will also likely be a key focus of the Trump administration that will be supported by Congress, although the exact scope and mechanism of these changes remain to be seen. Many companies that have chosen to be taxed as a partnership (such as limited liability companies) may find that converting to a corporation provides more certainty and comparable tax burdens for their investors. A significant reduction in business taxes could significantly impact tax structuring decisions made by companies. 

Environmental regulations appear to be a key focus that could improve market access for the ethanol industry. While Trump stated his support for the ethanol industry and the RFS, Congress’ support for these initiatives is not as clear. This could force the ethanol industry to focus on protecting its market share and the RFS even with the support of the Trump administration. It is possible the ethanol industry could see further legislation seeking to revoke the RFS this year. 

Healthcare reform will be a major focus of the new administration and Congress in 2017 and could result in the most disruptive changes faced by businesses in the United States. Regardless of one’s position on healthcare reform, any changes to the system could have wide ranging effects which will likely impact nearly all employers. If the Trump administration moves forward with a radical change to the Affordable Care Act, it could require employers to carefully consider the benefits they provide to their employees.

While there are a significant number of questions and very few answers, the best advice is to stay up-to-date on these potential legislative changes. There may be bumps along the way, but there will undoubtedly be opportunities in 2017 that will allow your companies to grow.

Author: Joe Leo
Attorney, BrownWinick Law Firm
[email protected]