Two new Trump executive orders may make it harder to get guidance from federal agencies in the future about what US law requires.

The orders direct federal agencies to cut back on the amount of “sub-regulatory” guidance they issue — notices, memos and letters — as opposed to more formal guidance requiring notice and comment periods. Formal guidance takes more time.

One of the new executive orders requires agencies to post all guidance on a searchable website. Anything not posted is considered rescinded.

The other order is supposed to prevent federal agencies from holding companies to standards that are in a “guidance document” as opposed to a statute or regulation. A “guidance document” is a ruling or notice that answers a technical question or interprets a statute, as opposed to a regulation that is only issued after notice and a period for public comment. Agencies are now barred from imposing “new standards of conduct” in guidance documents “except as expressly authorized by law.” The goal is to prevent the government from holding companies to standards that are “announced solely in a guidance document.”

Both executive orders were issued on October 9. They are EO 13891 and EO 13892.

Independent agencies like the Federal Energy Regulatory Commission or US Securities and Exchange Commission are not affected.

It is unclear to what extent the executive orders will force the IRS to scale back on taxpayer guidance. The IRS historically has used lots of different tools to help taxpayers understand how it reads the law. Most are helpful because they fill in missing detail. Some put the market on notice about things that the agency finds troubling.

The US Treasury said in March that it will cut back on issuing notices, limit the use of temporary rules and focus on notice-and-comment rulemaking. This was in the midst of a rush of proposed and temporary regulations and other guidance to implement a bill that Congress passed at the end of 2017 to overhaul the US corporate income tax.

Each agency will have 120 days after the Office of Management and Budget issues a memo implementing the executive orders to review all guidance documents and rescind ones that no longer apply. This has the potential to take agency lawyers away from issuing any new guidance.

In the future, any “significant guidance document” will have to run a bureaucratic gauntlet before it can be issued. There must be a notice and comment period of at least 30 days, and an agency response to all major concerns raised in comments, before it can take effect, and it will have to be approved on a “non-delegable basis” by the agency head or subhead — for example, by the US Treasury secretary or the head of the IRS, which is an agency within the Treasury, and then sent for vetting to the office of information and regulatory affairs or “OIRA,” an office within the Office of Management and Budget at the White House.

Meanwhile, the IRS issued a “priority guidance plan,” or list of 203 issues on which it hopes to issue guidance by June 30, 2020. The IRS has been issuing such lists annually since 1992. The lists are usually released in August. This one was not released until October. The IRS is usually able to address only a fraction of the items on the list. Items not addressed are often carried over to the next year.

A number of issues on the current list are of interest to the project finance community.

The IRS is rewriting its regulations on when investment tax credits can be claimed on such things as solar facilities, geothermal power plants, fuel cells and batteries. The agency has been working on this project since 2015.

The market is eagerly awaiting guidance on when tax credits can be claimed for carbon sequestration, meaning trapping carbon dioxide emissions and disposing of them in a secure geological formation or using them for such things as enhanced oil recovery. A tax equity market may develop around carbon sequestration projects after the guidance is issued. (For more detail, see “Tax Equity and Carbon Sequestration Credits” in the April 2018 NewsWire.)

New regulations for investments in opportunity zones are under review at OIRA and should be out soon. Opportunity zones are designated low-income areas. The government is offering investors with capital gains the chance to defer taxes on the gains by reinvesting them in real estate projects or businesses in such zones. (For more detail, see “Opportunity Zones and Renewable Energy” in the June 2019 NewsWire.)

Taxes are not usually triggered when one asset is traded for a similar asset in a “like-kind exchange.” The 2017 tax bill limited like-kind exchanges in the future to exchanges of “real property.” The IRS hopes to define what qualifies as “real property.”

The IRS is working on regulations explaining when income earned on partnership interests — called “carried interests” — that companies or individuals receive in exchange for services will have to be reported as ordinary income rather than capital gain. New rules on this subject were enacted in late 2017 and are in section 1061 of the US tax code.

Finally, the IRS is working on guidance relating to fees paid in connection with debt instruments and other securities.