Multi-State Contractors: The Decline of Federal Regulations – A Good Thing?

By: Sean T. Devenney, Drewry Simmons Vornehm, LLP

In the abstract, many construction company owners may be excited with the Trump Administration’s position to minimize the reach of Federal regulation and Federal regulatory actors.  The Trump Administration’s stated goal is to reduce the reach of the Federal Government.  In this regard, the Trump Administration is likely to take steps to address regulations that heavily impact the construction industry including OSHA, other aspects of employment regulation, and the EPA.  Facially, many owners of construction companies may be enthused by the reduction in the “red-tape” associated with compliance.  Indeed, less regulation typically means less complexity and more flexibility, with regard to how a construction company wishes to conduct business.  

However, it is important to remember that where the Federal administrative laws governing construction companies decline, there is certainly the potential for each individual State’s administrative rules to grow to fill any perceived void in the Federal Government’s oversight.  One clear benefit to a Federal Administrative State is that often (but not always) the Federal regulation provides a single target for owners of companies to meet the legal requirements of conducting business for work performed throughout the country.  This single target makes compliance with the Federal regulation “easier” for companies that conduct business in multiple states because they need only meet “one” Federally mandated legal requirement.  If the Trump Administration is successful in reducing the Federal regulatory state, it is possible (if not likely) that each State’s regulatory agencies will fill the void – leaving companies that do business in multiple states having to comply with perhaps vastly different regulations (and in some cases maybe even directly contradictory regulations).  This may cause some unintended inefficiencies as contractors are forced to address legal requirements on a state-by-state basis. 

In short, this may be a situation where contractors that perform work across state lines may have to be careful what they wish for.  Overall, it will certainly be interesting to see how this plays out over time.