Executive Order on Independent Regulatory Agencies

On February 18, 2025, the Trump Administration issued a new Executive Order, entitled “Ensuring Accountability for All Agencies,” that seeks to increase presidential oversight and control of independent regulatory agencies.  By instituting new consultation and approval requirements, and by expanding the White House’s power over agency objectives and budgets, the Order seeks to shift the relationship between the Presidency and independent agencies.   

Understanding the Executive Order

The Order applies to independent regulatory agencies, which are federal agencies established by Congress to regulate often highly technical subjects with some degree of insulation from presidential control.  These agencies, unlike typical executive agencies, are often governed by multi-member boards or commissions whose members are removable by the President only for cause.  The full list of independent regulatory agencies is set out in federal statute and includes, for example, the Federal Communications Commission, the Securities and Exchange Commission, the Consumer Financial Protection Bureau, and the Federal Trade Commission.^[1]

The Order imposes multiple new constraints on these independent regulatory agencies: 

• First, independent regulatory agencies must now submit significant regulatory actions to the White House’s Office of Information and Regulatory Affairs (“OIRA”) for review.^[2]
• Second, the Director of the White House’s Office of Management and Budget (“OMB”) will “establish performance standards and management objectives for independent agency heads” and will “report periodically to the President on their performance and efficiency in attaining such standards and objectives.”^[3]
• Third, the Director of OMB will “review independent regulatory agencies’ obligations for consistency with the President’s policies and priorities” and will “adjust such agencies’ apportionments by activity, function, project, or object, as necessary and appropriate, to advance the President’s policies and priorities.”^[4]
• Fourth, the chairs of independent regulatory agencies will now be required to “regularly consult with and coordinate policies and priorities with” the White House, “establish a position of White House Liaison in their respective agencies,” and “submit agency strategic plans . . . to the Director of OMB for clearance.”^[5]
• Fifth, the Order prohibits members of independent regulatory agencies from “advanc[ing] an interpretation of the law” in regulations or litigation “that contravenes the President or the Attorney General’s opinion.”^[6]

Putting the Executive Order in Context

Executive oversight of agencies through OMB is not new, but this Order extends that oversight to independent regulatory agencies for the first time.  The broader practice began in 1981, when President Reagan issued an executive order requiring most agencies—but not independent regulatory agencies—to submit all draft rules to OMB prior to publication, along with an analysis of the regulatory impact of any major rule.^[7]  A subsequent order during the Reagan Administration required every agency to submit a draft regulatory program to OMB each year, setting out its goals and objectives for the coming year.^[8]  President Clinton replaced those orders with Executive Order 12866, which maintained the requirement to submit an annual “agenda of all regulations under development or review” and refined the process for reviewing individual proposed regulations by requiring agencies to submit to OIRA only those proposed rules that constituted “significant regulatory action,” along with an “assessment of the potential costs and benefits” of the proposed action and its legal basis.^[9]  Executive Order 12866, like its predecessor, specifically exempted “independent regulatory agencies” from the requirement of submitting proposed rules to OIRA.  The Trump Administration’s Order broke from this tradition by redefining the agencies subject to OIRA review to include independent regulatory agencies.^[10]

So what does OIRA review entail?  Essentially, whenever OIRA believes that an agency should reconsider proposed significant regulatory action, OIRA may return the action with “a written explanation for [the] return setting forth the pertinent provisions of [Executive Order 12866] on which OIRA is relying.”^[11]  An agency may respond in writing if it disagrees with OIRA’s conclusion.^[12]  While an agency may not proceed with a proposed action without addressing concerns expressed by OIRA, Executive Order 12866 does not authorize OIRA to approve or disapprove a draft rule.^[13] 

The extension of OIRA review to independent regulatory agencies, while a significant change from past practice, is in line with an opinion authored by the Department of Justice’s Office of Legal Counsel (“OLC”) during the first Trump Administration.  That opinion concluded that the President “may direct independent regulatory agencies to comply with the centralized regulatory review process prescribed by Executive Order 12866.”^[14]  In OLC’s view, requiring independent regulatory agencies to submit significant regulatory actions to OIRA for review is permissible because it “would not test any statutory limits” on executive power, such as “restrictions on removal,” “multi-member governance, independent litigating authority, or open-meeting requirements.”^[15]

But the Trump Administration’s Order does much more than require independent regulatory agencies to engage in OIRA review.  As noted above, it also requires these independent agencies to consult and coordinate closely with the White House, gives OMB power to restrict agency spending, and constrains the agencies’ independence in litigation.  These significant changes align with the Trump Administration’s belief in the unitary executive theory, which conceives of the President as having direct control over all executive agencies, including independent ones.  Indeed, in describing the Order, the White House asserted as justification that “the Founders created a single President who is alone vested with ‘the executive Power’,” and “all executive branch officials and employees are subject to his supervision.”^[16]  The Trump Administration also has relied on the unitary executive theory to justify other actions it is taking to curtail administrative independence, such as the recent firing of the head of the Office of Special Counsel.^[17] 

Key Considerations Moving Forward

At this time, it is difficult to predict the exact impact of the White House’s increased control over independent regulatory agencies.  Still, companies and individuals assessing the impact of this Order should be aware of a few key considerations.

• Covered Agencies.The Order explicitly does 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,” even though the Board of Governors is an independent regulatory agency.^[18]The Order applies to the Board of Governors “only in connection with its conduct and authorities directly related to its supervision and regulation of financial institutions.”^[19]This carveout maintains the Federal Reserve’s independence in crucial areas of monetary policy, including in raising and lowering the federal funds rate.Also notable is the Order’s explicit extension to the Federal Election Commission, even though that agency is not among the statutorily defined independent regulatory agencies.^[20]
• New Limits on Agency Interpretation of Law.The Order mandates that independent agencies treat the President’s and Attorney General’s opinions on questions of law as controlling, and it bars independent agencies from taking positions that contravene those opinions.This change is likely to curtail agencies’ autonomy to develop and press independent interpretations of statutes or the Constitution.
• Performance Standards and Management Objectives.The Order directs the OMB to establish performance standards and management objectives for independent agency heads.This could impact how these agencies set priorities, and it will effectively diminish the authority of independent agency heads.Aligning agency performance with presidential policies may lead to shifts in agency focus and resource allocation, as agencies strive to meet the newly established OMB standards.
• Impact on Regulatory Innovation and Flexibility.By subjecting independent regulatory agencies to OIRA review, the Order could impact the regulatory process. The requirement for OIRA review introduces an additional layer of oversight that could slow down the rulemaking process, potentially delaying the implementation of regulations intended to address developments in rapidly evolving sectors such as technology and finance.
• Long-Term Impact on Regulatory Consistency and Stability.The centralization of power undermines Congress’s objective of insulating independent regulatory agencies from direct political influence so that they could “exercise the trained judgment of a body of experts ‘appointed by law and informed by experience.’”^[21]The loss of that independence and the increased executive oversight of independent agencies can be expected to increase the shifting in regulatory views and priorities when there is a change in Administration.That will likely further decrease regulatory consistency and stability.

Ultimately, certain aspects of the Order may be challenged in court, including on the grounds that they infringe on the congressionally established independence of the affected agencies.  We will monitor any such challenges and provide updates as the situation evolves.