Recent Executive Orders
Guidance for the Construction Industry
by Trent Cotney, Partner, Adams & Reese, LLP
(Editor’s Note: Trent Cotney, partner at Adams & Reese, LLP, is dedicated to representing the roofing and construction industries. Cotney is General Counsel for the Western States Roofing Contractors Association and several other industry associations. For more information, contact the author at (866) 303-5868 or go to www.adamsandreese.com.)
Since taking office, President Donald Trump has signed a series of executive orders that significantly impact the construction industry. These actions affect immigration, labor policies, permitting, project funding, trade, and other essential areas for contractors. To remain agile and compliant, contractors must stay informed and responsive to the evolving legal landscape.
Immigration
As promised throughout his campaign, Trump has quickly taken aim at immigration policy. He declared an emergency on the Mexican border and directed the United States Department of Defense and Department of Homeland Security to actively construct physical barriers at that border.
In addition, he has instructed United States Customs and Immigration Enforcement (ICE) to crack down on undocumented workers. The nation has seen numerous ICE actions in recent weeks, with officials visiting workplaces and detaining workers. This focus on immigration will have a significant impact on the construction industry, which is already experiencing a labor shortage.
Infrastructure & Climate Projects
On January 20, President Trump ordered federal agencies to halt the disbursement of funds from the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA). This move places numerous infrastructure and climate projects in limbo. The scope of this freeze remains unclear, with experts predicting months before the full implications become evident. While the directive appears to target green energy efforts, the uncertainty alone has disrupted ongoing and planned projects.
A bipartisan group of lawmakers requested an itemized list of halted projects, emphasizing the potential negative impact on communities relying on federal funds for essential infrastructure. Obviously, disruptions to project funding can lead to delays, cancellations, and legal issues, including continued payment obligations despite funding halts.
Also, on his first day in office, Trump signed another executive order aimed at expediting permits for energy infrastructure projects involving oil, gas, nuclear, coal, hydropower, and biofuel. Additionally, rulemaking powers under the National Environmental Policy Act were curtailed, potentially impacting project timelines.
Diversity, Equity, & Inclusion
Another set of executive orders focused on dismantling diversity, equity, and inclusion initiatives in federal contracts and grants. Trump’s administration also rescinded a landmark 1965 executive order banning discrimination in federal contracts, instructing agencies to encourage private businesses to follow suit. Statutory requirements for veterans and individuals with disabilities remain intact. This directive could have a dramatic impact on how federal contracts and grants are awarded.
Government Efficiency
Trump appointed tech billionaire Elon Musk to lead the newly formed Department of Government Efficiency with the purpose of cutting costs and weeding out waste. How this agency will impact the construction industry is unclear. We could see streamlined permitting processes, reduced regulations, and an increase in private-public collaboration, but all that remains to be seen.
International Tariffs
The president has asserted that tariffs are necessary to control illegal immigration and drug trafficking. His initial plan was to impose a 25% tariff on goods from Mexico and Canada, but that action has been delayed until at least March as negotiations continue. The 10% tariff on goods from China remains in play, although he recently exempted lower-value shipments from that country. In addition, he has commented that he intends to mandate tariffs on materials from other countries in the near future.
If these tariffs are widely imposed, prices of construction materials such as steel and aluminum could increase, which will impact the costs of building projects throughout the nation. Contractors and consumers will likely absorb those higher costs.
Legal & Compliance Considerations
Given the evolving regulatory landscape, contractors must take proactive measures to maintain compliance and mitigate risks. Construction companies are advised to take the following steps:
- Conduct internal audits of hiring policies and other current programs.
- Determine what IIJA and IRA projects could be impacted, review stop-work orders, and communicate with subcontractors as needed.
- Review affirmative action programs to ensure legal compliance.
- Review existing grants and financial assistance agreements.
- Maintain meticulous records of costs and compliance measures.
- Monitor agency guidance for updates.
These steps will help contractors navigate potential disputes and prepare for any claims that may arise from funding suspensions or contractual changes. Keep in mind that contracts or grants misaligned with new administrative priorities may face termination.
Final Thoughts
In the face of significant policy changes under President Trump’s administration, construction firms must adopt a forward-looking approach to navigate legal, financial, and operational challenges. By auditing existing programs and maintaining clear communication with stakeholders, contractors can better protect their interests and adapt to the rapidly evolving regulatory environment.
