New Executive Order on Regulatory and Enforcement Review: Topics to Watch in Corporate Enforcement
Client Alert | February 25, 2025
Gibson Dunn is available to help clients understand what these and other expected regulatory reforms will mean for them and how to navigate the shifting regulatory environment.
On February 19, 2025, President Trump signed an executive order titled, Ensuring Lawful Governance and Implementing the President’s “Department of Government Efficiency” Deregulatory Initiative. The order aims to focus “limited enforcement resources on regulations squarely authorized by constitutional” statutes and to “commence the deconstruction of the overbearing and burdensome administrative state,” which the accompanying “fact sheet“ claims will “unleash a new Golden Age of America.” While the executive order leaves many questions about the Trump Administration’s enforcement plans unanswered, it confirms that the Administration is likely to move regulatory enforcement in a direction that will have significant implications for corporate America.
The order’s core mandates are two-fold. First, agency heads are directed, “in coordination with their DOGE Team Leads,” to initiate a review process to identify potentially unconstitutional or otherwise problematic regulations and guidance documents—a process that Gibson Dunn has analyzed in a separate alert. As further described in that alert, the order directs agency heads to initiate a 60-day review of all regulations “for consistency with law and Administration policy,” with the goal of rescinding or modifying inconsistent regulations in conjunction with the Administrator of the Office of Information and Regulatory Affairs (OIRA). Second, the executive order requires agency heads to de-prioritize or terminate enforcement actions that are based on regulations that are at odds with federal statutory authority, the Constitution, or Administration policy.
Specifically, in parallel with reviewing regulations, the order directs agency heads to exercise their enforcement discretion to de-prioritize and terminate certain types of enforcement, subject to their “paramount obligation to discharge their legal obligations, protect public safety, and advance the national interest.” Agency heads should identify enforcement actions arising from regulations “that are based on anything other than the best reading of a statute” or that exceed the powers vested by the Constitution in the federal government.
Agency heads are also directed to “determine whether ongoing enforcement of any regulations identified in their regulatory review is compliant with law and Administration policy,” and, in consultation with the Director of the Office of Management and Budget (OMB), “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.”
The order defines enforcement actions broadly to include “all attempts, civil or criminal, by any agency to deprive a private party of life, liberty, or property, or in any way affect a private party’s rights or obligations” regardless of how the agency historically labeled the action. The order’s directives thus appear to reach not only administrative agencies charged with civil enforcement, but also the Department of Justice’s (DOJ) criminal enforcement policies, guidelines, and actions. We can anticipate that many ongoing Biden-era enforcement actions may be reviewed under the order.
Several areas are expressly exempted from the order—specifically, “any action related to a military, national security, homeland security, foreign affairs, or immigration-related function of the United States.” The order also does not apply to personnel decisions within the executive branch or “anything else” exempted by the director of OMB.
Potential Impact and Implications
The order’s directive regarding enforcement may affect different areas of federal enforcement to different extents, both in the immediate days ahead, as the order is implemented and faces any legal challenge, and longer into the future.
The extent of the impact of the order remains to be seen. In the short term, the order could lead agencies to pause or abandon ongoing investigations and enforcement actions, whether because those actions appear immediately to be contrary to Administration priorities or as a result of a review process. Additionally, the rapidly changing personnel landscape following DOGE-related initiatives and reductions in force may slow agency actions, including the review of enforcement actions required under this order, as a function of limited enforcement resources.
The order’s focus on ensuring that enforcement actions are properly grounded in authority granted to the agency by statute echoes the reasoning of the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), impacts of which Gibson Dunn has discussed previously. In that opinion, the Supreme Court overruled Chevron v. Natural Resources Defense Council, 467 U.S. 837 (1984), ending judicial deference to administrative agencies’ reasonable interpretations of ambiguous statutes and requiring that judges, rather than administrative agencies, declare what the law is, including with respect to statutes that may be the basis for enforcement actions. The executive order expressly directs agencies to focus enforcement on regulations that are “squarely authorized by constitutional” statutes. And this action by President Trump follows his direction a day earlier, in EO 14215, that “[n]o employee of the executive branch acting in their official capacity may advance an interpretation of the law as the position of the United States that contravenes the President or the Attorney General’s opinion on a matter of law, including but not limited to the issuance of regulations, guidance, and positions advanced in litigation.”
The implications may be more readily apparent for certain industries and areas than others. For example, even before the order, the U.S. Securities and Exchange Commission (SEC) had begun to reverse its Biden Era enforcement positions in the cryptocurrency space (including some that harken back to the first Trump Administration), as evidenced by the SEC seeking to dismiss high-profile litigation,[1] announcing internal reorganizations with the express goal of deploying enforcement resources judiciously,[2] rescinding certain staff bulletins that were part of the Biden Administration’s “stark aberration from longstanding norms as to” the SEC’s “legal authority, policy priorities, and use of enforcement,”[3] and forming a task force to “operate within the statutory framework provided by Congress” and establish “a sensible regulatory path” regarding crypto “that respects the bounds of the law.”[4]
Even for industries that have not yet been touched by Trump Administration shifts in focus, the executive order may create opportunities for entities that are highly regulated or subject to elevated enforcement scrutiny to argue that ongoing enforcement actions should be terminated. Such entities may need to brace for an extended period of uncertainty as their regulators determine how to implement the order. As a result, identifying, assessing, and quantifying regulatory and enforcement risks in the next several years might involve aiming at a moving target.
Open Questions
Although the language in the executive order reaches broadly, the full extent and specific bounds of its impact remain unclear. We expect at least two types of shifts, occurring in parallel and sometimes overlapping: (1) steps to end enforcement actions not based on the best reading of the relevant statute, and (2) changes that further the Administration’s new policy priorities. Some immediate questions arising from the order include, in each category:
Shifts to End Enforcement Not Based on the “Best Reading” of the Law
- Might the reviews of enforcement actions cause agencies to terminate compliance monitors, other mandated remedial measures, and undertakings arising from previously resolved enforcement actions? The order directs a review only of “ongoing” enforcement actions, contemplates termination of any non-compliant enforcement actions, and provides direction for prospective enforcement. In contrast to at least one other recent executive order (EO 14209), it does not expressly require agencies to review prior enforcement actions that have concluded. With respect to actions that have already been resolved, it remains unclear to what extent an agency might—or could, legally—seek to terminate ongoing obligations (such as corporate compliance commitments and self-reporting obligations) or to redress past enforcement actions that are now determined to be federal overreach or non-compliant with Administration policy. Such a possibility would be consistent with the approach required by EO 14209 regarding Foreign Corrupt Practices Act (FCPA) enforcement actions, discussed in our recent client alert. In a recent memorandum, the Administration also signaled an end, in the context of the foreign investment in the United States, to “open-ended ‘mitigation’ agreements” in favor of “concrete actions . . . within a specific time, rather than perpetual and expensive compliance obligations.”
- What are the implications of this executive order on the use of guidance documents as a basis for enforcement actions? During the previous Trump Administration, DOJ’s Office of the Associate Attorney General issued a policy prohibiting the use of guidance documents to establish violations of law in civil enforcement actions.[5] This executive order directs agencies to de-prioritize actions to enforce certain regulations and defines “regulation” as including non-binding guidance documents, but it does not explicitly address enforcement actions that enforce guidance documents. We expect this Administration may reinstate its previous policy, or a version thereof, and view with skepticism investigations and enforcement actions premised on violations of agency guidance. Such skepticism could have particularly meaningful effects in False Claims Act or criminal enforcement actions related to healthcare, government contracting, and regulated products.
- What is the interplay between this executive order and Attorney General Bondi’s recently issued policy memoranda? The Attorney General’s memoranda issued shortly after her swearing in are consistent with the policy pronouncements in this order. For example, we previously asked whether Attorney General Bondi’s February 5, 2025 memorandum, Reinstating the Prohibition on Improper Guidance Documents, signaled that DOJ may rescind Biden Administration guidance and memoranda regarding criminal enforcement, such as the current incarnations of the Criminal Division’s Evaluation of Corporate Compliance Programs guidance or Corporate Enforcement and Voluntary Self-Disclosure Policy. This executive order is another sign pointing in the direction of possible significant revisions in this space.
- Do agency administrative proceedings have much of a future? The order’s focus on regulations’ conformity with clearly vested authority could dovetail with a continued push to constrain regulatory enforcement processes with a strict reading of the Constitution. In the wake of the Supreme Court’s opinion in Loper Bright, it would not be a surprise to see Trump Administration agencies bring more enforcement actions in federal courts, which is already required for certain categories of enforcement following the Supreme Court’s opinion in SEC v. Jarkesy, 603 U.S. 109 (2024).
Shifts in Furtherance of Administration Policies and Priorities
- What impact will the executive order have on negotiated resolutions and settlements of enforcement actions? The order may have some impact on settlements and negotiated resolutions, but it remains an open question whether an interest in saving limited resources will lead to a greater tendency to settle or whether agencies will opt instead for litigation to press aggressive readings of statutes, regulations, or executive branch authority in service of the Administration’s priorities. By broadly defining enforcement actions, the order appears to apply equally to enforcement actions in adversarial proceedings and to those on pathways to negotiated resolutions. Agencies have historically used such settlements to save limited agency resources—one of the stated goals of the order. However, the order’s central theme of ensuring agencies bring only a subset of the enforcement actions they have historically pursued may mean less appetite for negotiated resolutions, if that subset is composed of stronger cases in areas important to the Administration.
- How will agencies continue enforcement outside the Administration’s stated priorities? It remains unclear how and to what extent agencies with legal obligations and a remit that partially touch on stated Administration priorities will conduct enforcement in other areas, and how agencies without such a remit will continue enforcement or receive further guidance and direction. In the latter category, the Consumer Financial Protection Bureau (CFPB) stands out as an early example of the Administration taking steps that effectively end agency enforcement that did not align with its policies, as Gibson Dunn discussed in a recent alert.
Questions Implicating Both Types of Shifts
- Do the order’s exemptions and “paramount obligations” matter? Although the subject matters explicitly exempted by the order appear straightforward, the devil may lie in the details. For example, EO 14209, which a week earlier mandated a review of FCPA enforcement, expressly relied on those enforcement actions’ importance in foreign affairs—an area exempt from this order. The accompanying fact sheet to that executive order also characterized the need for strategic advantages in critical minerals, deepwater ports, and other key infrastructure or assets around the world as “critical” to national security—another exemption from this order. Assuming the Administration maintains a consistent view, enforcement actions in these areas—and related regulations, policies, and guidance—would all be exempt from this order’s directives. It is equally possible, in theory, that agency heads’ “paramount obligations” to discharge their duties, protect public safety, and further national interests could exempt certain types of enforcement from the order’s directives.
- Is change the only constant? These directives are but the latest in a series of executive orders, which we track and have analyzed at length. It would be difficult to summarize succinctly their collective breadth and varying degrees of specificity. One thing we can say is that we have now seen several instances of executive orders intersecting with, and building upon, earlier ones. It is possible, if not probable, that the Administration will issue other directives that have an impact on a particular agency, regulation, or enforcement action before the agencies complete their reviews or OIRA develops a Unified Regulatory Agenda, as prescribed by this order.
We will continue monitoring and reporting on the changes implemented by the new Administration.
[1] See Dave Michaels & Vicky Ge Huang, Coinbase Says SEC Intends to Drop Lawsuit Against Crypto Exchange, Wall St. J., Feb. 21, 2025.
[2] See Press Release, SEC, SEC Announces Cyber and Emerging Technologies Unit to Protect Retail Investors (Feb. 20, 2025), https://www.sec.gov/newsroom/press-releases/2025-42.
[3] Mark T. Uyeda, Acting Chairman, SEC, Remarks at the Florida Bar’s 41st Annual Federal Securities Institute and M&A Conference (Feb. 24, 2025), https://www.sec.gov/newsroom/speeches-statements/uyeda-remarks-florida-bar-022425.
[4] Press Release, SEC, SEC Crypto 2.0: Acting Chairman Uyeda Announces Formation of New Crypto Task Force (Jan. 21, 2025), https://www.sec.gov/newsroom/press-releases/2025-30.
[5] Memorandum from the Associate Attorney General to Heads of Civil Litigating Components, DOJ, Limiting Use of Agency Guidance Documents in Affirmative Civil Enforcement Cases (Jan. 25, 2018), https://www.justice.gov/archives/opa/press-release/file/1028756/dl?inline. See Press Release, DOJ, Associate Attorney General Brand Announces End to Use of Civil Enforcement Authority to Enforce Agency Guidance Documents (Jan. 25, 2018), https://www.justice.gov/archives/opa/pr/associate-attorney-general-brand-announces-end-use-civil-enforcement-authority-enforce-agency.
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