EXECUTIVE SUMMARY

• Earlier this week, President Trump issued two significant executive orders seeking to, respectively, expand White House oversight and control of “independent agencies” and to establish an even more extensive deregulatory agenda than the recently announced regulatory budget framework.
• The independent agency order would extend further regulatory analysis requirements to such agencies while also establishing a policymaking apparatus that – pending potential changes to judicial precedents – could put those agencies under de facto White House control more broadly.
• The deregulatory order further builds out the administration’s apparent vision for its Department of Government Efficiency, and tasks the various agencies with undergoing a much wider review of rules currently on the books while also potentially limiting real-world enforcement of these regulations during the review process.

INTRODUCTION

This past week, President Trump signed two executive orders (EOs) that could lead to a profound reshaping of the federal regulatory landscape. The first, entitled “Ensuring Accountability for All Agencies,” seeks to expand current cabinet-agency regulatory review requirements to independent agencies as well as lay the groundwork for more direct control of independent agencies by the White House. The second, entitled “Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ [DOGE] Regulatory Initiative,” further updates the DOGE mission and tasks it, the Office of Management and Budget (OMB), and the various agencies with enacting a remarkably expansive deregulatory agenda that blows past even the administration’s regulatory budget project in terms of scope and impact. Either of these EOs would represent a substantial shift in regulatory policy on its own. When taken together – and in the context of other early Trump Administration actions – they represent a real potential sea change in the rulemaking process.

INDEPENDENT AGENCIES ORDER

Which Agencies Are Affected?

While all federal agencies are fundamentally creations of Congress, the determining factor of their “independence” lies in their relationship to whomever occupies the White House at a given time. Much of the government’s regulatory activity, of course, comes from executive agencies headed by cabinet secretaries that are nominated by, and answer directly to, the president. Yet there are many other “independent” agencies that, as the Congressional Research Service (CRS) puts it, have “greater autonomy from the President’s leadership and insulation from partisan politics than is typical of executive branch agencies.” The only real nexus of power that a president has held over such entities has generally been the power to appoint their leaders as vacancies arise. Per the statutory definition cited in this latest EO, the category of independent agencies currently includes:

The Board of Governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Consumer Product Safety Commission, the Federal Communications Commission [FCC], the Federal Deposit Insurance Corporation, the Federal Energy Regulatory Commission, the Federal Housing Finance Agency, the Federal Maritime Commission, the Federal Trade Commission [FTC], the Interstate Commerce Commission, the Mine Enforcement Safety and Health Review Commission, the National Labor Relations Board, the Nuclear Regulatory Commission, the Occupational Safety and Health Review Commission, the Postal Regulatory Commission, the Securities and Exchange Commission, the Bureau of Consumer Financial Protection [CFPB], the Office of Financial Research, Office of the Comptroller of the Currency, and any other similar agency designated by statute as a Federal independent regulatory agency or commission.

How Does This EO Affect the Regulatory Process?

The core aspect of the EO with regard to regulatory review comes in Section 3, which updates relevant language in EO 12866 – the longstanding order governing executive regulatory review writ large – to include the following language:

(b) “Agency,” unless otherwise indicated, means any authority of the United States that is an “agency” under 44 U.S.C. 3502(1), and shall also include the Federal Election Commission. This order shall not apply to the Board of Governors of the Federal Reserve System or to the Federal Open Market Committee in its conduct of monetary policy. This order shall apply to the Board of Governors of the Federal Reserve System only in connection with its conduct and authorities directly related to its supervision and regulation of financial institutions.

The previous language explicitly exempted independent agencies. With this update, independent agency rulemakings would, among other items, now need to include a cost-benefit analysis for “significant” rules (generally speaking, those that have “an annual effect on the economy of $100 million or more,” or meet other qualitative criteria). In the absence of this change, independent agencies sometimes included analysis as required by such statutes as the Regulatory Flexibility Act and Paperwork Reduction Act, but even under those requirements, independent agency regulatory analysis has generally been less fulsome than that conducted by executive agencies covered by EO 12866.

Expanding greater analysis requirements to such agencies is hardly a novel concept. For instance, the Obama Administration, with EO 13579, sought to induce greater retrospective review of prior rulemakings from independent agencies. This section of the current EO is the culmination of plans that have been under consideration by Trump Administration officials since the president’s first term. In April 2019, once-and-now-current OMB Director Russ Vought issued a memo that sought to induce greater oversight of independent agency rules the auspices of the Congressional Review Act, which covers a broader set of agencies and has a more expansive definition of “rules.” Furthermore, in October 2019, the Trump Administration’s Office of Legal Counsel issued its memo on the matter, concluding:

…that none of the common statutory hallmarks of independent agencies would stand in the way of applying EO 12866 to such agencies. Nothing in the centralized regulatory review process is inconsistent with their traditional “independence.” EO 12866 expressly preserves the substantive rulemaking discretion afforded to independent agencies, just as it preserves the substantive discretion enjoyed by nonindependent agencies.

While it is unclear why the Trump Administration did not move forward with this policy until this current EO, this most recent action codifies the kind of regulatory review framework relevant officials have had in mind for some time.

Other Aspects of the EO

The previous section has important implications for the practice of regulatory analysis going forward, but the EO’s ensuing sections may involve a much more consequential rearrangement of the very nature of these agencies’ “independence.” These provisions include:

• The OMB director establishing “performance standards and management objectives for independent agency heads, as appropriate and consistent with applicable law, and report periodically to the President on their performance and efficiency in attaining such standards and objectives.”
• Granting OMB greater authority to review such agencies’ budgetary commitments and “adjust such agencies’ apportionments by activity, function, project, or object, as necessary and appropriate, to advance the President’s policies and priorities.”
• Installing a “White House Liaison” in each agency to facilitate the coordination of “policies and priorities with the directors of OMB, the White House Domestic Policy Council, and the White House National Economic Council.”
• And declaring that the “President and the Attorney General, subject to the President’s supervision and control, shall provide authoritative interpretations of law for the executive branch. The President and the Attorney General’s opinions on questions of law are controlling on all employees in the conduct of their official duties.”

Implications for Independent Agencies

Per the EO’s “Policy and Purpose” section:

[I]n order to improve the administration of the executive branch and to increase regulatory officials’ accountability to the American people, it shall be the policy of the executive branch to ensure Presidential supervision and control of the entire executive branch.

The threat of removal for defying White House direction would be the primary way to affect such “supervision and control.” The core impediment to this policy aim with regard to many independent agencies, for the moment at least, is judicial precedent.

In Seila Law LLC v. Consumer Financial Protection Bureau, the Supreme Court ruled that, due to the agency’s structure and powers, the president does have the authority to dismiss the CFPB director “at will.” The Selia decision, however, stopped short of overruling the precedent set in Humphrey’s Executor v. U.S. that maintained protection for independent agencies headed by multiple members. While single-headed independent agencies (such as CFPB) now face effective White House control under this EO, the multi-member bodies (such as FCC or FTC) – which make up the majority of those included in the EO’s independent agency definition – could resist such directives unless or until Humphrey’s Executor is overturned. Such a decision would, of course, require litigation to wind its way up to the Supreme Court, which will presumably take some time. Although, there has already been litigation recently on this matter that could serve as a vehicle for any eventual decision.

DOGE DEREGULATION ORDER

Identifying Regulations for Removal

The primary policymaking item of the EO comes in Section 2 where it directs agencies, “in coordination with their DOGE Team Leads and the Director of the Office of Management and Budget,” as well as the Attorney General, to identify rules in their jurisdiction for potential recission or modification. The categories of rules that the EO directs agencies to look for include:

(i)    unconstitutional regulations and regulations that raise serious constitutional difficulties, such as exceeding the scope of the power vested in the Federal Government by the Constitution;
(ii)   regulations that are based on unlawful delegations of legislative power;
(iii)  regulations that are based on anything other than the best reading of the underlying statutory authority or prohibition;
(iv)   regulations that implicate matters of social, political, or economic significance that are not authorized by clear statutory authority;
(v)    regulations that impose significant costs upon private parties that are not outweighed by public benefits;
(vi)   regulations that harm the national interest by significantly and unjustifiably impeding technological innovation, infrastructure development, disaster response, inflation reduction, research and development, economic development, energy production, land use, and foreign policy objectives; and
(vii)  regulations that impose undue burdens on small business and impede private enterprise and entrepreneurship.

This set of criteria is notable for both the nature of the rules it seeks to address and the scope involved. First, unlike the updated regulatory budget EO that primarily focuses on addressing the quantifiable economic impact of the rules in question, the criteria here are generally qualitative. Second, one could potentially make the case that a significant portion of all federal regulations fall into at least one of these categories. As such, one can expect the eventual pool of regulations “identified” by agencies to be quite expansive. This section of the EO, of course, does not automatically rescind or modify the rules; agencies will still need to undergo a fuller process to make such changes official. Nevertheless, it represents a remarkably broad directive.

Enforcement Discretion

The primary aspect of this EO in terms of real-world impact comes in Section 3 regarding “Enforcement Discretion to Ensure Lawful Governance.” This provision establishes a standing order for agencies to “preserve their limited enforcement resources by generally de-prioritizing actions to enforce regulations that are based on anything other than the best reading of a statute and de-prioritizing actions to enforce regulations that go beyond the powers vested in the Federal Government by the Constitution,” and to “determine whether ongoing enforcement of any regulations identified in their regulatory review is compliant with law and Administration policy.” In past instances of administrative deregulatory activity, agencies were still generally bound to enforce the rules in place until such initiatives officially removed them from the books. These provisions suggest a more novel assertion of enforcement discretion to effectively neuter regulatory requirements while the administration formally reviews their status.

There have been some recent examples of what this could look like in the form of a series of “notices of enforcement discretion” from the Department of Transportation (DOT) regarding certain rules finalized toward the end of the Biden Administration. These notices all set a roughly 60-day window apparently inspired by the president’s “Regulatory Freeze” memo (while, somewhat interestingly, taking pains to note that they are “not explicitly subject to the President’s memorandum”). They also all contain language to the effect of: “DOT is providing notice that it will exercise its enforcement discretion and not enforce the provisions [the rule in question] to allow the officials appointed or designated by the President to review the final rule to ensure that it is consistent with the law and Administration policies.” It is difficult to know the exact parameters such notices will set under this EO – for instance, whether they are time-limited like the ones here or indefinite. Such factors will likely be contingent on the underlying statutory or regulatory authority of the agencies and rules involved. Additionally, the practical contours of these provisions will likely be shaped through the course of near-certain litigation challenging the administration’s assertion of this discretion across any number of issues.

Relation to Other EOs and Actions

One must also place the policies of this EO within the larger context of other Trump Administration orders – particular the overall DOGE effort and the independent agency EO discussed earlier. As this EO’s title suggests, it is the latest iteration of the quite-rapidly evolving DOGE apparatus. The still rather amorphous “agency” has gone from formally being tasked with improving federal information technology systems, to reassessing federal agency employee headcounts, to now this. The primary liaisons to the agencies are set to be the “DOGE Teams” established under the EO that formally implemented DOGE. In a sense, these represent a “re-branded” version of the “regulatory reform task forces” established under EO 13777 during Trump’s first term.

A particularly curious aspect of this EO as it relates to DOGE comes in its definitions section. In that it includes this seemingly mundane subpoint:

(f)  “Senior appointee” means an individual appointed by the President, or performing the functions and duties of an office that requires appointment by the President, or a non-career member of the Senior Executive Service (or equivalent agency system).

What makes this definition peculiar is that, while the EO makes a point of defining this term, it does not reference “senior appointee” anywhere else within the EO. This inclusion likely relates in some way to the (ongoing) confusion surrounding the official role and status of Elon Musk, who regularly appears to be its nominal leader in practice despite legal filings on the matter disavowing his involvement.

Finally, while there is no explicit connection between the two EOs discussed here, there is nothing in this latest DOGE one to suggest that it does not also apply to independent agencies now by way of the earlier one. In fact, there appears to be some degree of intentionality in issuing the independent agency EO a day ahead of the deregulatory EO. The independent agency EO setting the post of “White House Liaison” as a “Schedule C” position may also hold some connection to the aforementioned DOGE EO definition of “Senior appointee.” If the provisions of this EO do indeed apply to independent agencies as well now, that represents a policy shift that makes simply extending EO 12866 review to those agencies seem quaint.

CONCLUSION

The Trump Administration marks the first month of its second term with quite the one-two punch on the regulatory front. The EO on independent agencies expands the pool of agencies that now must conduct more rigorous cost-benefit analysis while also perhaps eliminating the practical distinction of “independent agencies” depending upon how certain judicial decisions unfold. The latter EO vastly expands the scope of the administration’s deregulatory review process and opens the door to the remarkable possibility of agencies forgoing enforcement of certain rules while such reviews are ongoing. This has been an especially wild and chaotic month in terms of politics, policymaking, and associated legal filings. It seems that it’s about to get even wilder.