Navigating Executive Actions: How to Assess Their Impact and Legality

In the first two weeks of his second administration, President Donald J. Trump has signed dozens of executive orders^[1] and “taken more than 300 executive actions”^[2] on a broad array of topics. These topics include oil and gas production;^[3] wind energy development;^[4] diversity, equity, and inclusion programs in the public and private sectors;^[5] use of the military in the immigration arena;^[6] birthright citizenship;^[7] and artificial intelligence.^[8] The pace of executive actions is expected to continue, and companies are trying to digest the actions’ impact on their business and operations.^[9]

Here, we offer a basic rubric for thinking through the impact of executive orders on your company’s business and operations, including when and how such orders, and agency actions taken pursuant to them, may be subjected to judicial review.

1. What is the scope of the executive order?

The first task when discerning the impact of an executive order on your business is to determine its scope. For example, some executive orders issued in the past two weeks direct agency heads to issue reports.^[10] Others invoke statutory authority conferred on the President.^[11] And others target specific businesses or projects that are either federally regulated or recipients of federal funding.^[12] Because executive orders often include broad language and undefined terms, discerning their scope or impact may be challenging.

2. What is the source of authority for the executive order?

The President may only act pursuant to statutory or constitutional authority. Youngstown Sheet & Tube Co., 343 U.S. at 585 (1952) (“The President’s power, if any, to issue the order must stem either from an act of Congress or from the Constitution itself.”). Thus, analyzing the legality of an executive order or action first turns on identifying the constitutional or statutory basis for presidential action. For some executive orders, the text expressly provides the source of authority.^[13] For others, however, no source is identified, and even for those where an authority is cited, companies should confirm that the cited authority sufficiently authorizes the action being taken. The authority relied on, if any, will often determine the nature of the legal challenge.

3. How will the executive order likely be implemented?

Executive orders often require interpretation and further implementation by one or more federal agencies. Accordingly, in many cases, the signing of an executive order is followed by further guidance from the White House (specifically, the U.S. Office of Personnel Management) and implementation memoranda from the corresponding federal agencies.^[14] These memos not only provide further direction to the agency, but also offer more insight to the public on how the agency interprets the executive order. In the absence of an implementation memo, the impact analysis may be more challenging.

4. How imminent are the harms from the action to your company?

Once you have concluded that the executive order’s implementation is likely to affect your business, the next critical step is to determine the likelihood and imminency of the identified harms. It is well settled that one cannot sue to seek redress for theoretical or abstract injuries.^[15] In such circumstances, courts are likely to conclude that your company lacks standing to challenge the executive order or agency action. Litigation might be appropriate, however, in cases where the identified harms are concrete and particularized, and either currently occurring or certainly impending.^[16] Importantly, the harms also must flow from the challenged action.^[17] In determining whether a harm is imminent enough to bring suit, consider whether the executive order itself sets time limits on the corresponding agency to take action.^[18] The existence of past history of enforcement against your business (or a similarly situated entity) for the conduct or program at issue could show a reasonable likelihood of enforcement that would allow your business to bring suit against the government. 

5. Should your company consider affirmative litigation?

There are business-specific, strategic, and risk-appetite considerations for deciding whether to challenge an executive order or action in federal court. It may be prudent to consider affirmative litigation if the foreseeable harms to your business are ripe for litigation and align with your company’s strategic interests.

6. What claims against executive action have been successful?

Examples of successful challenges include claims that: (1) the President (or agency) has exceeded his statutory or constitutional authority;^[19] (2) the challenged order or action is so vague and unclear about what actions or duties are required or proscribed in violation of the Constitution’s Due Process Clause;^[20] (3) the challenged order or action chills free speech or association rights in violation of the First Amendment;^[21] and (4) the challenged agency action, if final and not committed to agency discretion, is arbitrary and capricious in violation of the Administrative Procedure Act.^[22]