Jump to:
- Key Development
- Executive Orders in Question
- A Looming Clash Over Independence
- Potential Expansion of Presidential Power
- Takeaways
A number of early actions by the Trump Administration, including a series of Executive Orders aimed at independent regulatory agencies and recent positions taken by the Department of Justice in litigation, are reviving longstanding constitutional questions regarding the scope of executive power and the autonomy of independent agencies. Many of these acts already have met constitutional challenges in courts. But, if they are upheld, these initiatives could have a profound impact on the functioning of independent regulatory agencies. In the short term, the initiatives could result in the potential removal of the heads of a number of independent agencies, and, in the longer term, the initiatives could ensure that independent agencies act more in accord with the President’s policies and priorities.
Key Development
On March 1, 2025, U.S. District Judge Amy Berman Jackson, in the District Court for the District of Columbia, blocked an order from the White House to remove, without identifying cause, the current head of the US Office of Special Counsel (“OSC”), Hampton Dellinger1. Judge Berman’s Order finds that the OSC does not wield much, if any, executive authority and that the mission of the OSC—“to look into and shine light on a set of specific prohibited practices”—requires that the head of the OSC “remain entirely free of partisan or political influence, and that is why the statute survives scrutiny even under the most recent precedent.”2
This litigation directly brings focus on a significant constitutional and regulatory debate over the power of the Executive Branch over independent agencies, which have long been excluded from the President’s direct reach and control since at least the Great Depression and New Deal era. The effort to remove Dellinger is accompanied by a change in direction by DOJ, announced by the U.S. Solicitor General Sarah M. Harris on February 12, 2025, that the DOJ will no longer defend the “for cause” removal standard for commissioners at multi-member commissions, as the DOJ asserts that for cause removal is unconstitutional3. This all sets up a likely challenge to Humphrey’s Executor at the Supreme Court which is already well in motion. DOJ has already appealed Judge Jackson’s March 1 Order to the D.C. Circuit.4
The President’s power to remove the head of an independent agency is just one element of Trump’s effort to assert expanded executive power over independent regulatory agencies. To this end, two recent Executive Orders from the White House seek to alter how independent federal agencies make rules, investigate potential violations and bring enforcement actions. If they survive expected lawsuits challenging their constitutionality, these Executive Orders will result in direct White House influence over decision-making by agencies that have remained relatively independent since they were established in the New Deal Era. For companies regulated by these agencies, this new approach would present both risk and opportunity in dealing with their regulators. The question, which we endeavor to address in this note, is what this shift in approach might ultimately look like.
Executive Orders in Question
Agency Accountability Order: President Trump issued the “Ensuring Accountability for All Agencies” Executive Order on February 18, 2025 (“Agency Accountability Order”)5. This Order sets forth the Administration’s policy of “Presidential supervision and control of the entire executive branch” which appears to be issued directly in response to the administration’s stated view that “previous administrations have allowed so-called ‘independent regulatory agencies’ to operate with minimal Presidential supervision . . . [which] currently exercise substantial executive authority without sufficient accountability to the President, and through him, to the American people.”
The underlying objective of the Agency Accountability Order appears to be a significant restructuring of the United States regulatory apparatus which in large part arose out of the New Deal and has been in place in some form or another since the 1930s6. These developments raise many questions regarding the separation of powers and what to expect from the future actions of congressionally created independent regulatory agencies as defined in 44 U.S.C. § 3502(5), including the SEC, CFTC, FERC, EPA, FTC, FCC, NLRB, CFPB, and the ITC.7
This Agency Accountability Order sets forth several ways through which the Administration will rein in independent agencies, including:
(a) review of significant regulatory actions, specifically requiring agencies to “submit for review all proposed and final significant regulatory actions to the Office of Information and Regulatory Affairs (OIRA) [a presidential office] . . . before publication in the Federal Register”;
(b) interpretation of law, stating that the President and Attorney General “shall provide authoritative interpretations of law for the executive branch” which will be “controlling” on executive branch employees and who may not “contravene[]” those opinions, including any “regulations, guidance, and positions advanced in litigation” unless “authorized” in writing by the President or Attorney General; and
(c) heightened OMB and White House oversight, requiring agencies to establish a White House liaison and the requirement to consult with that White House liaison and the Office of Management and Budget (“OMB”) personnel on an ongoing basis to ensure the agencies activities are consistent with and advance the President’s policies and priorities.
Previously, executive branch agencies were generally required to adhere to similar restrictions under President Clinton’s EO 12886, as amended by President Obama’s EO 13563, but independent agencies were exempted from the requirements of these executive orders. In contrast, the Agency Accountability Order goes a few steps further in requiring establishment of a new liaison position and requiring coordination and prior approval from the President.8
Deregulatory Initiative Order: The President also issued a corresponding Executive Order (the “Deregulatory Initiative Order”), backed now by the authority of the Agency Accountability Order, requiring agencies to coordinate with the newly formed Department of Government Efficiency (or “DOGE”) and the OMB to “review all regulations” and “focus the executive branch’s limited enforcement resources” on regulations that “squarely” are authorized by the constitution and to deconstruct the “overbearing and burdensome administrative state.”9 This Order requires agency heads to “determine whether ongoing enforcement of any regulations identified in their regulatory review is compliant with law and Administration policy.”10 Under this Order, “agency heads in consultation with the Director of the Office of Management and Budget, shall, on a case-by-case basis and as appropriate and consistent with applicable law, then direct the termination of all such enforcement proceedings that do not comply with the Constitution, laws, or Administration policy.”11
The Agency Accountability Order and the Deregulatory Initiative Order (the “Orders”) appear to have triggered a number of disputes, with multiple pieces of litigation having been filed not only in regards to the President’s ability to terminate officers at independent agencies, but also relating to the President’s ability to control the operations of the Consumer Financial Protection Bureau, a Congressionally created independent agency that conducts both regulatory and enforcement work.
Analysis
1. A Looming Clash Over Independence
The History of Independent Agencies: Since as early as the First World War, Congress has passed federal legislation resulting in the creation of independent agencies. For example, Section 4(a) of the Securities Exchange Act of 1934 “established a Securities and Exchange Commission . . . to be composed of five commissioners to be appointed by the President by and with the advice and consent of the Senate. Not more than three of such commissioners shall be members of the same political party, and in making appointments members of different political parties shall be appointed alternately as nearly as may be practicable.”12 Interestingly, although the SEC has been widely recognized to be an “independent” agency, the Securities Exchange Act of 1934 is silent on the President’s ability to remove or control the conduct of the five commissioners, which is often viewed as a key touchstone of independence. The FTC is similarly organized with five commissioners, but the FTC Act limits removal of Commissioners to reasons of “inefficiency, neglect of duty, or malfeasance in office.” The agencies were designed to be insulated from direct Presidential influence and political pressure from both executive and legislative interests.
As a practical matter, the President has always exercised a fair amount of control over federal regulatory agencies through the power to appoint chairs and commissioners of those agencies. These appointed officials in most cases were viewed as carrying out the President’s broad regulatory and economic policy agenda through decisions to promulgate, repeal, or amend regulations in a manner consistent with the President’s policy agenda. The same is generally true in the enforcement arena, where appointed officials (which in many cases represent a majority of the decision-makers at the agency) often tend to pursue litigation and enforcement positions consistent with the prevailing policies in the executive branch. However, this influence that Presidents have traditionally held over federal independent agencies is different from the level of influence that the Orders contemplate.
The independence of federal agencies to presumably act in accord with specialized expertise in its particular field has been viewed by some (but not all) as an appropriate way to manage and balance the delicate legal, regulatory, social, and economic considerations arising out of the regulatory framework established by Congress during the post-World War II and post-Cold War eras. The Orders raise questions about the process if an agency, via a majority vote, diverges from the views of the current President, what recourse could be taken in such an event, and whether these independent agencies must consistently align with the political agendas of the White House today and in future administrations.
Previous Legal Challenges to Independent Agencies: The constitutionality of these Orders will be determined in court. The U.S. Supreme Court’s previous rulings confronting the issue of Presidential control over independent agency leadership are a bit ambiguous about whether the President may exercise the type of authority President Trump is attempting to assert under the Agency Accountability Order. In Humphrey’s Executor v. United States, 295 U.S. 602, 619-20 (1935) (“Humphrey’s Executor”), President Roosevelt’s New Deal policies clashed with the conservative stance of William Humphrey, an FTC Commissioner appointed by Calvin Coolidge. Roosevelt requested Humphrey’s resignation multiple times but when the disagreement boiled over, Roosevelt fired him. The Court upheld a statute that protected FTC Commissioners from removal except for “inefficiency, neglect of duty, or malfeasance in office.” Critically, the Court in Humphrey’s Executor held that Congress could limit the President’s ability to terminate FTC Commissioners because the FTC’s duties were not political or executive multimember bodies (noting the FTC was composed of five members—no more than three from the same political party), but instead called for “the trained judgment of a body of experts” “informed by experience” and were charged with “quasi-judicial” or “quasi-legislative” duties.13
Distinguishing Humphrey’s Executor, in Selia Law the Supreme Court invalidated the removal protections for the CFPB Chair contained in the Dodd-Frank Act, noting that unlike the FTC, the CFPB is an independent agency led by a single Director and vested with significant executive power. In making its determination that the CFPB Director does not merely act in a quasi-legislative or quasi-judicial manner, the Court pointed to how the CFPB Director had the authority to promulgate binding rules under 19 federal statutes, “including a broad prohibition on unfair and deceptive practices in a major segment of the U.S. economy” (instead of rendering reports and recommendations to Congress, which is what the FTC did in 1935), “instead of submitting recommended dispositions to an Article III court, the Director may unilaterally issue final decisions awarding legal and equitable relief in administrative adjudications” and that the CFPB Director may seek monetary penalties against private parties in federal court, which is an executive power not considered in Humphrey’s Executor.14 The Agency Accountability Order asserts that this power is, and can be directed by, purely Executive concerns.
In addition to the Dellinger litigation, the White House is in litigation relating to the CFPB. President has fired the head of the CFPB, Rohit Chopra, also a former FTC Commissioner, and directed the agency to cease operations. A lawsuit was filed by the National Treasury Employees Union (joined by a number of other interested parties) challenging the administration’s power to take these steps. The Trump Administration has responded by arguing that they are not closing the CFPB but merely reducing its size to make it more streamlined. That dispute also resides with Judge Amy Berman Jackson of the U.S. District Court of the District of Columbia, where she has issued a preliminary stay of the layoffs of CFPB staff. A hearing is scheduled for early March.
2. Potential Expansion of Presidential Power
The substantive effect of the Agency Accountability Order is not immediately obvious. Practically, the independent agencies, when supported by a majority of commissioners, commonly consult and act in general accordance with White House policy. It is not uncommon for most independent regulatory agencies to promulgate rulemakings consistent with the policy goals of the in-place White House. This suggests that for normal policy issues, the Order will not practically change the current practice.
But independent agencies are designed by congressional legislation to have a number of structural mechanisms aimed at maintaining independence. These mechanisms include fixed terms for agency heads, a balance between political parties for multi-member commissions, limited statutory mandates outlining specific duties, and judicial review (outside the purview of Executive mandate) for agency actions. The Agency Accountability Order may face legal scrutiny under a claim that it intrudes on the delegation of legislative power to the agencies which allows them to promulgate detailed regulations or rulemakings to enforce broad legislative mandates (as opposed to more purely executive functions, including enforcement).
Tension is likely to arise where the agencies (represented by a majority of commissioners) believe a directive by the White House is not advisable, not in the public interest, wrong or potentially worse (corrupt or unethical). For instance, the Nixon White House directed then SEC Chair William J. Casey to delay the testimony of a key witness in the investigation of Robert Vesco for looting his company, after Vesco “donated” cash to the Nixon campaign. The SEC Enforcement Director refused to delay and Chair Casey supported him and subsequently testified in the Watergate hearings about the incident.
The lack of direct authority of the President over independent agencies has also permitted the agencies to pursue cases within their statutory and legal remit, which might have been more controversial (or altogether halted) if the President had direct input into the nature of the agencies’ investigations and litigation. Looking back in history (including during the deregulatory push years under President Ronald Reagan), the SEC conducted a number of investigations and instituted litigation targeting current Executive branch officials. For example, in 1984 the SEC brought an enforcement action against the chairman of the Federal Aviation Administration, J. Lynn Helms, alleging fraud in the sale of bonds.15 Again, in 1985, the SEC brought charges alleging that Paul Thayer, then the Deputy Secretary of Defense, and his associates engaged in insider trading.16 Earlier, the SEC brought an enforcement action against T. Bertram Lance, President Jimmy Carter’s director of the Office of Management and Budget, alleging securities fraud and other violations.17 Under the Agency Accountability Order, it is fair to question whether the SEC (or other agencies) will be free to conduct these types of investigations and bring these types of charges.
Takeaways
While the scope and legal fate of the Orders remains uncertain, there are a few takeaways to keep in mind.
First, the Orders represent a stark reminder that “policies and priorities” of the White House remain key considerations for all federal administrative agencies’ rulemaking and enforcement decisions. To the same end, companies and individuals before these agencies either on regulatory, examination, or enforcement matters will also want to consider these White House policies and priorities and the impact (either positive or negative) that they have on a particular position or action.
Second, counsel will need to have greater awareness and expertise of the current Administration’s priorities and frame their cases with those concerns in mind.
Third, these developments create a lever through which the President could seek to exert more direct influence over enforcement decisions at independent agencies.
Fourth, the Agency Accountability Order’s requirement for rulemaking proposals to be submitted for advance review and approval is likely to make the process slower than it previously was, and rulemakings may become, to some degree, less frequent.
Fifth, independent agencies sometimes push the boundary of their legislative authority—for example, the FTC’s recent rulemaking seeking to ban non-competes has been challenged with two district courts enjoining the rule nationwide, and finding that the rulemaking exceeded the authority of the FTC’s power.18 The expectation for Presidential consultation and approval, at least through the new designated White House liaison, may reduce the frequency of these controversial rulemakings. However, the opposite effect may also be true — Presidential administrations could seek to rely more heavily on agency rulemakings to advance their agendas.
Finally, it is important to note that the Orders are subject to litigation challenges that may take some time to resolve through the court system. The fate of the Orders is far from clear.
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1 Dellinger v. Bessent, Case 1:25-cv-00385, Dkt. No. 32 (D.D.C. Mar. 1, 2025) (the “March 1 Order”).
2 Id. at 5-6.
3 See https://fingfx.thomsonreuters.com/gfx/legaldocs/movawxboava/2025.02.12-OUT-Durbin-530D.pdf (“To the extent Humphrey’s Executor requires otherwise, the Department intends to urge the Supreme Court to overrule that decision.”). The Office of Special Counsel is not a multi-member commission, but the OSC head is subject to the same “for cause” requirement—removal “by the President only for inefficiency, neglect of duty, or malfeasance in office.” 5 U.S. Code § 1211.
4 Dellinger v. Bessent, Case 1:25-cv-00385, Dkt. No. 34 (D.D.C. Mar. 1, 2025). DOJ also filed a motion to stay the March 1 Order. Dkt. No. 36.
5 https://www.whitehouse.gov/presidential-actions/2025/02/ensuring-accountability-for-all-agencies/.
6 The first independent federal agency was the Interstate Commerce Commission, which was created in 1887 to address monopolistic pricing and conduct in the railroad industry. https://www.senate.gov/artandhistory/history/minute/Interstate_Commerce_Act_Is_Passed.htm.
7 The Order also states that while the Order does not extend to control over the nation’s monetary policy, it does apply to the Board of Governors of the Federal Reserve System in connection with its conduct and authorities directly related to its supervision and regulation of financial institutions.
8https://www.archives.gov/files/federal-register/executive-orders/pdf/12866.pdf;
https://obamawhitehouse.archives.gov/the-press-office/2011/01/18/executive-order-13563-improving-regulation-and-regulatory-review
9The “Ensuring Lawful Governance and Implementing the President's ‘Department of Government Efficiency’ Regulatory Initiative” Executive Order, https://www.whitehouse.gov/presidential-actions/2025/02/ensuring-lawful-governance-and-implementing-the-presidents-department-of-government-efficiency-regulatory-initiative/.
10Id.
11Id.
12See https://www.govinfo.gov/content/pkg/COMPS-1885/pdf/COMPS-1885.pdf.
13 Seila Law LLC v. Consumer Fin. Prot. Bureau, 591 U.S. 197, 215-16 (2020) (citing Humphrey’s Executor 295 U. S. at 632).
14 Seila Law, 591 U.S. at 218-19.
15 https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=3034&context=dlj at 291-92.
16 Id. at 292.
17 Id.
18 Ryan, LLC v. FTC, 24-cv-986, D.I. 11 at 26 (N.D. Tex. Aug. 20, 2024); Properties of the Villages, Inc. v. Federal Trade Commission, No. 5:24-cv-316-TJC-PRL (M.D. Fla. Aug. 14, 2024).