It is not a procedural formality — it is the most effective defense against an expansive federal government.
It is not a procedural formality — it is the most effective defense against an expansive federal government.
P resident Trump recently issued an executive order aimed at cutting unnecessary regulations and reducing the size of the federal bureaucracy. The deregulatory initiative empowers the Department of Government Efficiency (DOGE) and federal agencies to slash regulations that exceed constitutional authority, impose undue burdens on businesses, or stifle innovation and economic growth. This directive is yet another weapon in the Trump administration’s arsenal to reform the bloated federal government.
While deregulation is key to restructuring, there is one powerful tool that the Trump administration has yet to fully unleash in its quest to streamline government and reduce federal overreach: federalism.
By design, the U.S. Constitution divides power between the federal government and the states, ensuring that decisions affecting everyday life are made as close to the people as possible. Federalism not only protects individual liberties but also encourages innovation and efficiency by allowing states to tailor policies to their unique needs. It also serves as a vital check on federal overreach, preventing Washington from imposing one-size-fits-all solutions that often do more harm than good.
Federalism has long been a cornerstone of the regulatory process, reinforced by statutes like the Unfunded Mandates Reform Act of 1995, which requires federal agencies to assess and limit the financial burden of regulations on states.
Additionally, executive orders have attempted to formalize the role of states in federal decision-making. President Reagan laid the groundwork for modern federalism oversight with Executive Order 12612 in 1987, which required agencies to respect state authority and assess the impact of their actions on state power. In 1999, President Clinton replaced Reagan’s order with Executive Order 13132, which, while still requiring agencies to consider state impacts, softened some of the stronger constraints Reagan had put in place.
Unfortunately, both the statutory and executive safeguards designed to protect federalism have too often become bureaucratic box-checking exercises rather than genuine mechanisms for limiting federal overreach. Agencies frequently conduct minimal assessments, failing to fully account for the financial and regulatory burdens their actions impose on states. As a result, states are often left with no choice but to challenge federal overreach in court, a time-consuming and costly process that diverts resources from addressing local priorities.
In light of this, a coalition of more than 130 state leaders is calling on the Office of Management and Budget (OMB) to strengthen the federalism review process as part of the administration’s broader deregulatory efforts. In a letter signed by the state leaders, the coalition calls on OMB Director Russell Vought to issue clear guidance that prevents federal agencies from bypassing state authority in the implementation of regulations.
The letter outlines key recommendations to maximize the impact of Trump’s deregulatory push by embedding federalism in the regulatory process. It calls for agencies to assess how regulations affect state governance, justify federal oversight, and evaluate financial impacts on states. Agencies should train employees on federalism principles, consult with state officials before finalizing regulations, and publicly disclose federalism impact assessments that detail their analysis of how proposed regulations affect states.
Finally, it recommends establishing a dedicated federalism review function within OMB to ensure agency compliance with federalism requirements. This function would complement the cost-benefit analysis produced by the Office of Information and Regulatory Affairs (OIRA), ensuring that federalism concerns are fully considered during regulatory review and preventing rules from improperly preempting state authority.
These reforms are essential to restoring the balance of power envisioned by the Founders. By reducing federal overreach and empowering states to take the lead on policy issues, the administration can foster innovation, enhance fiscal responsibility, and create a more accountable government. Moreover, strengthening federalism will make it more difficult for future administrations to rapidly expand the federal bureaucracy, providing a long-term safeguard.
Federalism is not a procedural formality — it is the most effective defense against an expansive federal government. As the Trump administration pushes forward with its efforts to make Washington more accountable and efficient, the message from state leaders is clear: federal power needs to stop where state authority begins.