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President Trump Expected to Block Blacklisting Rule

Today, President Trump is expected to approve a Congressional Review Act resolution of disapproval to repeal what is known as the Blacklisting rule. Upon signing, federal government agencies are prohibited from issuing a similar regulation. The regulation stems from a 2014 Executive Order that established excessive reporting requirements on federal contractors.

In short, the Blacklisting rule requires contractors who bid on federal contracts over $500,000 to report alleged, as well as actual labor violations over the last three years. Reported violations can be used to block a company’s bid.

As I previously wrote:

This is exactly the kind of red tape that the Congressional Review Act was intended to eliminate.

The Blacklisting rule does far more harm than good. The government couldn’t produce an official estimate of its benefits (because of a lack of data supplied by agencies), but found more than $400 million in costs to the government and employers in the first two years of the rule. In addition, the rule adds a burden of 2.1 million hours of paperwork on the regulated community.

At a minimum, agencies should be able to quantify the benefits of a regulation before they are finalized. Further, sensible governing should require that the benefits of red tape outweigh the costs. The Blacklisting rule did neither.

Besides imposing huge costs with unknown benefits, the regulation forces federal contractors to disclose alleged violations of wrongdoing, not actual labor violations. It is absurd that government regulations would disqualify federal contractors from a bid for allegations and not only real violations.

But it is plainly obvious why the rule was constructed to include alleged violations—to ease union organizing. As noted in a letter of support for the Blacklisting CRA from the Competitive Enterprise Institute:

In turn, this may provide incentive to labor unions, in the midst of organizing campaigns, to file frivolous labor-related charges against companies that bid on federal contractors in order to extract favorable union election conditions, like greater access to the workplace or card-check election.

This is a good first step toward reversing the Obama administration’s dreadful labor and employment policies. Over eight years, the Obama Department of Labor and National Labor Relations Board created a regulatory maze that imposed immense costs and paperwork, which made it terribly difficult to run a business and comply with the law. Hopefully, this move is sign that more deregulation efforts are coming.