Summary of 2025 Immigration-Related Executive Orders
The Trump administration has issued a number of executive orders since taking office that impact immigration. While these do not directly target employers or address business immigration, they nevertheless may impact employers and their workforce.
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Trump Administration Makes First Round of Cartel Foreign Terrorist Organization Designations with Focus on Mexico and Venezuela
The US State Department has made its first round of designations pursuant to Executive Order 14157, “Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists,” identifying eight international cartels and transnational organizations as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs).
As Bracewell discussed earlier this month, these designations create criminal exposure for any entity — US or foreign — determined to have provided “material support” to one of these organizations. An entity may be found liable for providing “material support” to one of these organizations if it provides any property (tangible or intangible) or services, including currency, financial services, lodging, personnel and transportation.
To avoid unwittingly doing business with or providing material support to these newly designated FTOs and SGDTs, it is imperative that companies conduct renewed due diligence on their counterparties and supply chains, and reassess their anti-corruption controls and compliance measures.
The newly designated FTOs and SDGTs, and their leadership as alleged by US law enforcement, include:
Tren de Aragua (TdA). Key leadership includes: Hector Rusthenford Guerrero Flores, a/k/a “Niño Guerrero,” [1] Yohan Jose Romero, a/k/a “Johan Petrica,”[2] and Giovanny San Vicente, a/k/a “Giovanni.”[3]
La Mara Salvatrucha (MS-13). Key leadership includes: Edenilson Velasquez Larin, a/k/a “Agresor,” “Saturno,” “Tiny,” “Erick,” and “Paco;” andHugo Diaz Amaya, a/k/a “21” and “Splinter.”[4]
Cártel de Sinaloa. Key leadership includes: Ismael Zambada-Garcia, a/k/a “El Mayo,” and Joaquin Guzman Lopez, son of “El Chapo” Guzman.[5]
Cártel de Jalisco Nueva Generación (CJNG). Key leadership includes: Nemesio Rubén Oseguera Cervantes, a/k/a “El Mencho.”[6]
Cártel del Noreste (CDN). Key leadership includes: Juan Gerardo Trevino-Chavez, a/k/a “Huevo.”[7]
La Nueva Familia Michoacana (LNFM). Key leadership includes: Johnny Hurtado Olascoaga, a/k/a “El Pez,” and Jose Alfredo Hurtado Olascoaga, a/k/a “El Fresa.”[8]
Cártel del Golfo (CDG). Key leadership includes: Jose Alfredo Cardenas-Martinez, a/k/a “El Contador.”[9]
Cártel Unidos (CU).
In addition to international cartels that operate primarily in Mexico, this list includes two transnational organizations mentioned specifically in E.O. 14157: TdA, which originated in Venezuela but is also active in parts of South America, including Chile, Colombia and Peru; and MS-13, which originated in Los Angeles but is also active in Mexico and parts of Central America, including El Salvador, Guatemala and Honduras.
Companies conducting business in the countries listed above should beware of the organizations’ infiltration of legitimate industries. La Nueva Familia Michoacana and Cártel Unidos, for example, are heavily involved in the agricultural landscape of Michoacán, Mexico, particularly in the production of avocados. US law enforcement alleges that the Cártel de Jalisco Nueva Generación ran an elaborate time share fraud scheme that targeted US owners of time shares in Mexico.[10] Many cartels also operate legitimate businesses in order to launder money.
For more information, see “Guiding Your Company Through Trump’s New Latin America Enforcement Policy” or reach out to Bracewell’s government enforcement and investigations team for guidance.
[1] https://www.state.gov/reward-for-information-hector-rusthenford-guerrero-flores
[2] https://www.state.gov/reward-for-information-yohan-jose-romero/
[3] https://www.state.gov/reward-for-information-giovanny-san-vicente/
[4] https://www.justice.gov/usao-edny/pr/two-national-ms-13-gang-leaders-and-other-ms-13-members-and-associates-indicted
[5] https://www.ice.gov/about-ice/hsi/news/hsi-insider/notorious-sinaloa-cartel-leaders-arrested
[6] https://www.state.gov/nemesio-ruben-oseguera-cervantes-el-mencho-2
[7] https://www.ice.gov/news/releases/leader-cartel-del-noreste-arrested-following-ice-hsi-investigation
[8] https://ofac.treasury.gov/media/929446/download?inline
[9] https://www.ice.gov/news/releases/head-gulf-cartel-indicted-following-ice-hsi-federal-partner-assisted-investigation
[10] https://home.treasury.gov/news/press-releases/jy2465
Michigan Legislature Passes Last-Minute Amendments to Earned Sick Time Act, Minimum Wage Laws
Highlights
The Michigan Legislature recently made amendments to the state’s Earned Sick Time Act, which became effective Feb. 21, 2025
Large employers have until March 23, 2025, to comply with the statute’s notice requirements
The legislature also amended the states minimum wage laws, increasing from $10.56 to $12.48. However, the amendment salvages the tipped minimum wage, though it will increase to 50 percent of the minimum wage rate by 2031
The Michigan Legislature recently passed amendments to the Earned Sick Time Act and those amendments were signed into law by Gov. Gretchen Whitmer. Except for delays regarding notice requirements and the application of the law on certain small employers and some other minor changes, the amendments became effective Feb. 21, 2025. Required accruals of earned sick leave for large employers begin on that date. Large employers otherwise now have until March 23, 2025, to comply with the statute’s notice requirements.
Earned Sick Time
Sometimes procrastination pays. In the latest example, many employers across Michigan spent the last several months drafting policies and preparing for the Earned Sick Time Act (ESTA) to become effective following last summer’s Michigan Supreme Court decision in Mothering Justice v. Attorney General, only to wake up on Feb. 21 this year, the planned effective date, to learn many requirements of the law had changed. While the changes are not everything the employer community hoped for, the changes did offer some improvement.
The amendments eliminated some of the most problematic provisions of ESTA, including those creating presumptions of guilt and providing individual rights to bring a lawsuit and recover attorney fees if successful. However, ESTA remains one of the most aggressive paid leave statutes in the country and continues to contain unclarified ambiguities, and the amendments still are applicable (without delay) to most Michigan employers despite only a few hours’ notice.
As a result, despite the amendments effective Feb. 21, 2025, most employers in Michigan still are required to begin accruing for and provide their employees one hour of paid time off, which can be used for ESTA required purposes, for every 30 hours they worked. Salaried staff are still assumed to work 40 hours each week unless their normal workweek is less, in which case they are presumed to accrue time based on their normal workweek. However, the amendments revised the definition of who is an employee to confirm the following individuals are outside ESTA’s requirements:
Those employed by the U.S. government
Unpaid trainees and interns (under a rather strict and ambiguous definition)
Individuals employed in accordance with the Youth Employee Standards Act
An individual who works in accordance with a “self-scheduling policy” if both of the following conditions are met:
The policy allows the individual to schedule the individual’s own working hours and
The policy prohibits the employer from taking adverse personnel action against the individual if the individual does not schedule a minimum number of working hours
The state’s updated FAQs also confirm that, generally, elected public officials, members of public boards and commissions, and other similar holders of public office are not considered employees for ESTA purposes unless the entity treats those individuals as employees.
Small businesses (i.e., those who average 10 or fewer, previously was defined as fewer than 10, employees over any 20 or more calendar weeks in a calendar year) were likely the biggest beneficiaries of the recent amendments. For them, the application of ESTA is postponed until at least Oct. 1, 2025, and the amendments also limit their leave obligations to 40 hours of paid leave in a 12-month period, eliminating the prior requirement that they provide 32 hours of unpaid leave in addition to the paid leave requirements.
Lastly, for small employers who did not employ an employee before Feb. 21, 2022, they are not required to comply with ESTA until three years after the date the employer employs their first employee, which means that some small businesses will not be subject to ESTA until well after the Oct. 1, 2025 deadlines, and new small businesses will have the benefit of a three year grace period before ESTA applies.
In addition to these changes, the amendments also provided the following:
Confirms that all employers may frontload benefits to satisfy ESTA requirements and doing so removes any carryover obligations.
Employers can frontload time for part-time staff based on the hours they are expected to work so long as if the individual works more than the hours expected, they provide additional leave in an amount no less than they would have earned under the normal ESTA accrual rates.
Confirms that an employer is not required to include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay, tips or gratuities in the normal hourly wage or base wage upon which paid earned sick time compensation is based.
Caps carryover requirements at 72 hours (40 for small businesses) annually and allows an employer to avoid carryover obligations by paying the employee the value of any unused accrued paid sick time at the end of the year in which it was earned.
Maintains the ability for unforeseeable absences an employer can require employees to provide notice of an absence immediately after the employee becomes aware of the need for paid sick time so long as the employer:
Provides employees with a written copy of the policy requiring notice and setting for the procedures for providing notice of the need for leave (and any changes thereto within five days)
The notice requirement allows the employee to provide notice after they become aware of the need for ESTA qualifying leave
Absent satisfaction of these two requirements, ESTA continues to limit an employer’s ability to require notice of an absence to “as soon as practicable” and:
Allows an employer to require employees to return reasonably required documentation related to absences of more than three consecutive days within 15 days of the employer’s request.
Provides special rules for employers who are subject to a collective bargaining agreement that requires contributions to a multi-employer plan.
Allows an employer to require employees hired after Feb. 21, 2025, to wait up to 120 calendar days to use accrued benefits.
Reduces the period of time an employee can leave and be re-hired without obligating an employer to honor previously accrued benefits from six months to three months, and confirms that it is not required at all if an individual is paid the value of their accrued but unused benefits at the time of transfer or separation.
While employers are still prohibited from awarding attendance points for ESTA related absences, they can now undisputedly discipline employee who uses paid time for purposes other than those provided by ESTA. Not only does this change better allow employers to use a single bank of time, but it opens the door to allow employers to discipline staff who might be tempted to use paid leave fraudulently subject to adequate employer proof.
Confirms that employees covered by a collective bargaining agreement are only exempt from ESTA to the extent the collective bargaining agreement “conflicts with” the statute.
Maintains the requirement that successor employers honor the benefits accrued under predecessor employers, but removes that requirement if employees are paid the value of their accrued but unused benefits at the time of succession.
Confirms that individuals covered by an employment agreement (contract) that conflicts with ESTA and was in place before Dec. 31, 2024, are not subject to ESTA for the period of the agreement (up to three years) so long as the employer notifies the Department of Labor and Economic Opportunity of the existence of the agreement.
Gives employers the option to require employees use paid time off in one-hour increments or smaller increments used by the employer to account for absences.
Confirms that the state is solely responsible for enforcement and that employees must pursue complaints within three years from when they know of an alleged violation.
In addition to the prior civil remedies and fines provided, provides additional liability for civil remedies for any employer failing to provide earned sick time to an employee in an amount not more than eight times the employee’s normal hourly rate.
Minimum Wage and Tip Credit
The Michigan Department of Labor and Economic Opportunity has already updated the English version of the required notice postings, which can also be used for the individual notice required for all employees and new hires. However, the department has not yet completed the Spanish version or other documents related to ESTA. Employers subject to the act must post these notices and provide notice to employees and new hires, in both English and Spanish (as well as any other language spoken by 10 percent or more of its workforce), by March 23, 2025.
In addition to the ESTA amendments, the legislature also passed an amendment to Michigan’s Improved Workforce Opportunity Wage Act. In doing so, the minimum wage still increased from $10.56 an hour to $12.48 an hour on Feb. 21, 2025. However, the tipped minimum wage was retained, though it will increase by 2 percent each year beginning in 2026 until it hits 50 percent of the minimum wage in 2031.
The amendments also added a $2,500 fine for employers who fail to ensure tipped workers get paid at least minimum wages and increases the minimum wage to $13.73 effective Jan. 1, 2026, and $15 effective Jan. 1, 2027. Thereafter, annual increases to the minimum wage rate will occur based on inflation.
Takeaways
While these amendments would appear to finally put an end to the disputes related to ESTA which have occurred since signatures were initially submitted to put the provision on the ballot in 2018, we may not be done yet. Groups supporting the original ballot proposals have already announced plans for statewide referendums restoring the amendments. However, such an effort would require they gather signatures from over 223,000 Michigan voters to qualify for a spot on a future ballot.
Backwards Down the Number Line: Assessing the State of Alabama’s Medical Cannabis Program Four Years After Its Enactment
Ronald Reagan famously asked voters, on the eve of the 1980 presidential election, to ask themselves whether they were better off than they were four years ago. It was a powerful question that asked Americans to take stock of how they saw their lives at that time versus four years before.
When it occurred to me recently that almost four years have passed since the enactment of Alabama’s medical cannabis program, it took me back. I decided to scroll through the pictures on my phone from the Spring of 2021 – seeing pictures of my family in earlier times with different haircuts and different perspectives on life – and I found myself feeling like the Kodak executives must have felt when Mad Men’s Don Draper (played perhaps in only the way Jon Hamm could play him) first introduced them to The Carousel.
“Nostalgia,” Don said, “literally means ‘the pain from an old wound… It’s delicate, but potent… It takes us to a place where we ache to go.”
So perhaps this is my meditation on nostalgia, through the lens of the Alabama medical cannabis program.
Where Are We Now?
So here we are, four years later. And I ask myself whether Alabama’s medical cannabis program is better off than it was four years ago. The easy answer is, of course, no. After all, not one Alabamian has received legal medical cannabis in that time. How, one could reasonably ask, is that possible?
I’m reminded of the lyrics from the title of this post:
Laughing all these many years
We’ve pushed through hardships, tasted tears
We made a promise one to keep
I can still recite it in my sleep
While many might find it hard to find laughter in what has transpired over these years (unless you have a particularly perverse sense of humor, in which case the author requests the privilege of a beer soon), we have certainly pushed through hardships and likely shed tears. But there are many of us committed to keeping a certain promise, one that I can recite in my sleep: Alabama will provide medical cannabis to patients with qualifying conditions who can benefit from that medicine.
How Did We Get Here?
To determine where we are, we need to know where we came from. Ah, the salad days of 2021. The sky was the limit. Patients were going to finally access medicine they had sought for years. Operators saw opportunities to help (and make a dime at the same time). Lawyers, including the author, were in high demand, and the conversations were cutting edge and exciting. Heady times, indeed.
Alabama became the 36th state to allow cannabis for medical use when Gov. Kay Ivey signed into law the Darren Wesley ‘Ato’ Hall Compassion Act on May 17, 2021. The act established a process through which applicants would compete for a limited number of licenses in the following categories: (1) cultivator; (2) processor; (3) dispensary; and (4) “integrated facility” (which can cultivate, process, transport, and dispense medical cannabis under one license), as well as a to-be-determined number of licenses for secure transporters and testing laboratories. A Medical Cannabis Commission was established to license and regulate the medical cannabis program, with input from the Alabama Department of Agriculture and Industries on cultivation matters.
Many assumed – based on the statutory requirements that the commission accept licenses by September 1, 2022, and that the commission make a decision within 60 days – that licenses would be awarded late that year. Others, including the author, assumed that licenses would be awarded by the commission in early 2023. I’m wrong about things probably every day of my life, but I might not have been more wrong in my life than I was about that assumption.
Rather than require applications to be submitted on September 1, 2022, the AMCC set out a detailed timeline for the application and license awarding processes. The key takeaways:
Applicants could “request” a “License Application Form” from the commission between September 1 and October 17.
The deadline for submitting applications was December 30.
The commission intended to issue licenses on July 10, 2023.
All 94 applicants who submitted an application by the December 30, 2022, deadline received a deficiency notice of some kind, and applicants were provided an opportunity to cure those deficiencies. The University of South Alabama was assigned with the responsibility of leading the efforts to grade the applications.
On June 12, the AMCC announced its intent to issue 21 licenses to cultivators, processors, dispensaries, secured transporters, laboratory testing facilities, and integrated facilities.
In a shocking development, only four days later, the Alabama Medical Cannabis Commission voted to stay all proceedings related to the current offering of medical cannabis business licenses. The stay was issued because of the commission’s discovery of potential inconsistencies in the tabulation of scoring data and the commission’s need for additional time to seek an independent review of all scoring data.
In August 2023, the AMCC announced new awards. The results were largely the same as the June 12 awards, but they differed in a couple of ways. First, three additional cultivation licenses were awarded and one of the secure transportation licenses that received an award in June was not awarded a license in August. Second, there was a significant change in the integrated facility category: Verano Alabama, which scored highest in the University of South Alabama’s grading in both June and August, was removed from the list of awardees, replaced by INSA Alabama, which finished seventh in the August scoring but was nevertheless awarded an integrated license.
Care to guess what happened next? Yep, lawsuits. I probably qualify for medical cannabis based on the PTSD I experienced during this period, but I’ll summarize:
Many applicants argued that the AMCC violated the Open Meetings Act when it retired to executive session and engaged, according to the challengers, in improper deliberations and a secret ballot in violation of Alabama law. The logic of the balloting is fairly straightforward. Challengers point out that (1) there must have been deliberations about the applicants in order to lead to the changes in the scoring, particularly in the integrated facility category, and (2) the “nominating” process essentially ensured that the nominations made in executive session would dictate the award of licenses because those receiving the most nominations were essentially ensured of receiving the most votes and the voting stopped before other applicants were considered. The AMCC denies that deliberations occurred and points to the fact that commissioners could have changed their nominations at any point, including before submitting the nominations to AMCC staff in public session.
Applicants have challenged the process by which rules, regulations, and decisions made by the AMCC violated the Alabama Administrative Procedures Act. These claims go to the heart of the entire licensing process and, if successful according to challengers, call for the process to essentially begin again. Several other applicants have raised challenges to the manner in which applications were scored and whether the AMCC requirement that dissatisfied applicants pay the entire license fee (ranging from $30,000 to $50,000) in order to seek an administrative appeal of the AMCC’s decision violates due process.
Verano Alabama has argued that the AMCC lacked the authority to stay its June 12 awarding of licenses and that it should be awarded a license. In prior hearings the court has expressed skepticism about this argument, but it remains a live issue.
As these lawsuits were filed, the court held a number of hearings. At each opportunity, the court expressed its strong preference that the AMCC work with challengers to find a path forward that would allow for the awarding and issuance of licenses. The court concluded that the applicants had established a prima facie case that the commission had violated the Open Meetings Act and stated that it would enter a temporary restraining order preventing the issuance of licenses while the court conducted an evidentiary hearing on the alleged violations of the act.
In October 2023, in an effort to turn things around (and avoid more litigation), the AMCC adopted new regulations and changes to existing regulations:
An emergency rule creating additional application procedures;
An almost-identical permanent rule that is due for public comment; and
A set of technical changes to current rules.
The new rules created new procedures for:
Re-submitting any exhibits that existed on December 30, 2022, but which were adversely affected by the 10-megabyte file size limit on portal submissions;
Reducing the amount of material that is redacted in each application and opening the applications for additional public comment;
Any applicant who failed a pass/fail item to show cause why they should not have their application rejected;
Applicants to present their application to the AMCC and advocate for themselves in person;
Disclosing certain scoring and grading information; and
Considering, voting on, and awarding licenses in an open meeting, which the public can attend.
Finally, it seemed, we came to an end game as 2023 neared its close. We detailed the complex process – which was the result of a mediated settlement among some, but not all, litigants in the Montgomery County case – here, but the gist was that applicants would each have the opportunity to plead their case in an open hearing of the AMCC, and the AMCC would render its decision shortly thereafter.
Those hearings occurred and the AMCC awarded a third round of licenses. And everyone lived happily ever after, right? Not so fast my friend. Almost immediately, the court enjoined the issuance of dispensary and integrated licenses.
Those injunctions remain in place today, more than a year later. Applicants, advocates, and other stakeholders have been stuck in a sort of limbo since the final week of 2023. I can’t believe what I just wrote and how many lives have been impacted in the meantime. What a mess.
So Now What?
It’s hard not to become cynical observing this process play out. To pull from another Phish song:
The packaging begins to breakAnd all the points I tried to makeAre tossed with thoughts into a binTime leaks out, my life leaks in
But, as I have written recently, I believe that we have made progress – painfully slow and halting to be sure – and may well be on the precipice of getting this program off the ground:
But somehow in the face of years of advising clients and potential patients going through the hell that can be waiting on lawmakers, regulators, and courts to get a medical cannabis program off the ground, I became an optimist. At first, I’m sure it was little more than putting on a brave face for disappointed, frustrated, and even angry folks wondering why they couldn’t simply get resolution to their dreams. Perhaps this was the “fake it ‘til you make it” phase of my journey, but over time I actually became optimistic that Alabama would be able to launch a medical cannabis program that could provide relief to Alabamians so desperate for a different kind of therapy for what ails them.
Conclusion
I asked for a crystal ball for Christmas, but instead I got a bunch of quarter-zip sweaters (not the most perfect styling for a self-professed cannabis lawyer), so I can’t promise you what is going to happen. What I can promise you is that, while there are certainly those who seem committed to watching the whole structure burn down if they aren’t awarded a license, there are more on the side of making this work. More people looking to the court system – and particularly the appellate courts giving direction to the trial court – to bring some closure to this process. I remain optimistic this is the path forward.
If we can do that, we can stand up a medical cannabis program with integrity, decency, and empathy that Alabama can be proud of. Wouldn’t that be nice? That is a place where I ache to go.
Professionally Speaking February 2025
Professionally Speaking explores current topics of interest to general counsel, claims professionals and risk managers for various professional liability lines, including accountants, lawyers, design professionals, insurance brokers and others.
Read the Newsletter Here
Trump Administration Directs CFIUS to Tighten Restrictions on Investment From Certain Countries While Easing National Security Reviews of Investments From Allies and Partners
On 12 February 2025, President Donald J. Trump signaled his administration’s approach to foreign investment policy with a presidential memorandum, “America First Investment Policy” (The Policy) Among the most significant priorities, The Policy directs the Committee on Foreign Investment in the United States (CFIUS or the Committee) to ease foreign investments by allied and friendly countries and to further restrict Chinese investment in critical sectors. This policy will substantially revise CFIUS’s approach under the Biden Administration by, among other things, instructing the Committee to rationalize the process for mitigation of national security threats. The Policy in general signals a shift to a more flexible atmosphere for investors from countries that the United States considers to be allies and partners, while requiring more in-depth reviews of investments from adversarial countries.
Key Changes to CFIUS and Investment Policies:
1. Facilitating Investments From Allies
Streamlined Processes
To encourage investments from allied nations, The Policy proposes a “fast-track” process for investors from key partner countries (to be identified). This initiative aims to ensure that such investments directly bolster US economic growth and innovation. Previous attempts to streamline friendly country investments through the “Excepted Investor” provision in the CFIUS regulations have been narrowly tailored and challenging to navigate.
A more expansive process could significantly impact CFIUS reviews, especially since most transactions over the past five years have involved investors from countries such as the United Kingdom, European Union member states, Canada, Japan, and the United Arab Emirates. The policy seemingly aims to create clearer guidelines, which might better distinguish between genuine national security threats and investment opportunities that pose limited risk.
The policy stipulates that the “fast-track” process will include conditions to prevent foreign investors from friendly countries partnering with investors from China.
For instance, companies engaged in significant joint ventures or joint research operations in China, particularly those that may benefit Chinese military development, may face exclusion from fast-track treatment.
Crucially, the policy directs “more administrative resources” toward facilitating investments from key partner countries to avoid the “overlay bureaucratic, complex, and open-ended ‘mitigation’ agreements for US investments from foreign adversaries.”
Additionally, the policy directs the federal government to expedite environmental reviews for any investment over US$1 billion.
2. Encouraging Passive Investment From All Sources
The policy appears to direct CFIUS to reverse a trend we have observed in the past four years toward increasingly difficult reviews of strictly passive investments, with no control or access to material nonpublic technical information, especially investments from China with no apparent connection to or control by the Chinese government. The policy notes that “the United States will continue to encourage passive investments from all foreign persons.” To the extent this includes investments from China or other countries of concern this could be a significant development in encouraging more access to capital for many US companies.
3. Enhanced Scrutiny of Chinese Investments
At the same time, the policy does signal additional restrictions on Chinese investments in key areas:
Targeted Sectors
CFIUS is instructed to intensify its review of foreign investments, particularly those originating from countries the US government considers to be adversaries or potential adversaries, such as China, in sectors such as sensitive technology, critical infrastructure, healthcare, agriculture, energy, and raw materials.
Real Estate
The policy emphasizes protecting US farmland and properties near sensitive facilities, and aims to expand CFIUS’s authority over “greenfield” investments to prevent foreign adversaries from gaining control over essential US assets. As a result of the Foreign Investment Risk Review Modernization Act of 2018, CFIUS jurisdiction was already expanded to real estate acquisitions and greenfield developments within proximity of certain military bases and other sensitive facilities such as maritime ports and airports.
4. Restrictions on Outbound Investments
Sensitive Technologies
According to the policy, the Administration is considering new or expanded restrictions on US outbound investments involving China, especially those related to sensitive technologies like semiconductors, artificial intelligence, quantum computing, biotechnology, hypersonics, and aerospace. These outbound investment restrictions will likely build on the Outbound Investment Program regulations under Executive Order 14032, which came into effect on 2 January 2025, and already restrict or requirements notification of investments in Chinese entities engaged in certain semiconductor, quantum, and AI development and production activities.
5. Increased Securities Oversight
The policy further expressed a policy emphasis on “auditing of foreign companies on US exchanges” including “reviewing their ownership structures and any alleged fraud.” Presumably, this would entail greater scrutiny to ensure that foreign issues listed on US exchanges accurately and full identify their direct and indirect shareholders. Although not mentioned, presumably the focus will be on Chinese companies, which will build on enhanced scrutiny of auditing and reporting methodology of Chinese issuers on US exchanges.
Implications for Investors
Opportunities for Allied Investors
Overall, the policy signals a shift in US policy to favor investments from allied and other nonadversarial nations, especially the “NATO plus” countries. Such investments could benefit from fast track review process as well as increased scrutiny of China and other countries considered by CFIUS to be of concern. However, such investors may still attract scrutiny if they maintain significant commercial operations in China, especially those in the critical technologies space. Rulemaking to implement the policy may be crafted in such a way to discourage friendly country investors from continuing significant operations in China.
Increased Compliance Requirements
Deals that involve any connections to Chinese investors should anticipate more rigorous CFIUS reviews. The scope of industries that may be considered to have a national security impact will also be broader, to the point that almost any China-connected investment should be carefully assessed for CFIUS considerations. The need to drill down into any potential connection to investors from China will be crucial for transactions aiming to benefit from the more open environment for allied and partner countries.
Strategic Investment Planning
US entities considering outbound investments in sectors like technology and infrastructure should stay informed about potential restrictions to avoid unintentional violations.
Next Steps
While some of the policy changes in the policy can be accomplished through a shift in enforcement priorities at CFIUS and other relevant agencies, other changes will require regulatory rule writing and even legislative changes. Proposed regulations should be issued shortly via an advance notice of rulemaking, which may give interested parties the opportunity to submit comments on final rules.
Lots of Action – The First Weeks of the Trump Presidency
It has proven to be an eventful first month of the new administration with multiple executive orders, memoranda issued, and lawsuits filed in response. Things are moving quickly and should be continually monitored for developments occurring on a weekly (if not daily) basis. This article provides a brief – and far from exhaustive – overview of the employment-related actions and reactions.
Diversity, Equity and Inclusion
On January 21, 2025, the president issued Executive Order 14173 aiming to eliminate all DEI and DEIA policies and programs within the federal government and private sector. On February 5, 2025, Attorney General Pam Bondi issue a memorandum directing the DOJ to initiate broad investigations of private company for civil rights violations related to diversity, equity, and inclusion.
Multiple lawsuits have been filed against the executive order. Plaintiffs, including the National Association of Diversity Officers in Higher Education among many others, filed suit in the United States District Court for the District of Maryland [Case No. 1:25-cv-00333] seeking to enjoin and declare the executive orders unconstitutional. On February 21 the presiding judge issued an opinion granting parts of the preliminary injunction.
In addition, attorneys general from 16 states issued an open letter titled “Multi-State Guidance Concerning Diversity, Equity, Inclusion, and Accessibility Employment Initiatives” in response to Executive Order 14173.
At-Will Employment for Federal Employees
On January 20, 2025, the president issued Executive Order 14171 to reclassify many federal employees as at-will employees. This would make it easier to terminate their employment as they would no longer be in the “competitive service” category with the benefit of job protections and instead would be in the “schedule policy/career” category. Federal employees have previously not been considered at-will employees with due process protections under the Civil Service Reform Act of 1978.
Multiple lawsuits have been filed by federal labor unions challenging Executive Order 14171. The National Treasury Employees Union, Government Accountability Project, and AFF-CIO each filed separate lawsuits in the D.C. federal court [case number 1:25-cv-00170], and the Public Employees for Environmental Responsibility filed a separate action [case no. 8:25-cv-00260] in federal court in Maryland.
Ending Remote Work for Federal Employees
The president issued his “Return to In-Person Work” executive order to end remote work for federal employees. Specifically, agencies were informed to have remote workers back in the office within 30 days, which looks to be the last day of February. Unless those employees are able to procure a waiver or special authorization to continue to work remotely, or accept the buyout offered by the administration (see immediately below), their employment will be terminated.
On January 28, 2025, federal employees were informed of a “Fork in the Road” offering employees the “deferred resignation” program of compensation until September 30, 2025, if they resign now, with an initial deadline of February 6, 2025. A lawsuit was filed by the American Federation of Government Employees in early February in federal court in Massachusetts seeking to enjoin the directive, but the presiding judge recently denied preliminary injunctive relief based on lack of standing and lack of subject matter jurisdiction.
Federal Government Recognizes Only Two Genders
On January 20, 2025, the president issued Executive Order 14168 stating that the federal government will only recognize two genders – male and female – removing the transgender and nonbinary categories. The order rescinded previous guidance from the EEOC under the previous administration that LGBTQ employees are legally protected under Title VII of the Civil Rights Act.
The president followed that up by issuing the “Keeping Men Out of Women’s Sports” Executive Order 14201 on February 5, 2025, directing the federal government to interpret and enforce Title IX under the gender definitions provided in Executive Order 14168 and applying it to women and girls’ sports. A lawsuit in New Hampshire federal court [case no. 1:24-cv-00251] that was originally filed in August 2024 is now seeking to amend and add claims related to the executive orders.
Nullifying Recent Collective Bargaining Agreements
On January 31, 2025, the president issued a memorandum entitled “Limited Lame-Duck Collective Bargaining Agreements That Improperly Attempt To Constrain the New President” nullifying collective bargaining agreements (CBAs) with federal agencies that were finalized during the last month of the previous administration. CBAs that might have negotiated telework for their employees are now called into question and likely will not be followed by federal agencies.
Federal unions have contended that such action violates binding CBA contracts.
IGs Fired
On January 24, 2025, the administration sent emails to several inspectors general (IGs) of federal departments and agencies informing them that their employment had been terminated and then they promptly lost access to their government email accounts and facilities.
On February 12, 2025, eight of the IGs filed a lawsuit in federal court in D.C. [case no. 1:25-cv-00415] alleging that the action violated the Inspector General Act, requiring Congressional notification and seeking a declaratory judgment that the terminations were legally ineffective and that they remained IGs.
NLRB Memos Rescinded
On February 14, 2025, acting National Labor Relations Board General Counsel William Cowen issued GC 25-05, which rescinded a series of memos issued by previous General Counsel Jennifer Abruzzo that set a new course for the agency during the Trump administration. The memo commented that the backlog of cases has grown “to the point where it is no longer sustainable. The unfortunate truth is that if we attempt to accomplish everything, we risk accomplishing nothing.” The GC 25-05 memo rescinded a total of 31 previous memos, either permanently or pending further guidance, related to remedies sought, the rights of student athletes under the NLRA, severance agreements, and non-compete agreements, among others.
Additionally, the president recently terminated the employment of NLRB member Gwynne Wilcox, a Democrat. Wilcox, whose term was supposed to run through 2028, filed a lawsuit [case no. 1:25-cv-00334] in federal court in D.C. against the president and NLRB Chairman Marvin Kaplan. Only days after filing the lawsuit, Wilcox filed a motion for expedited summary judgment. The matter remains pending. By firing Wilcox, the NLRB is now left without enough members to issue rulings until more members are appointed.
Stay Tuned
Much has taken place under the new administration, and the items mentioned (along with other orders and actions that may be forthcoming) should be monitored for continued developments. There is undoubtedly much more to come.
Key Changes in the Revised Earned Sick Time Act for Michigan Employers
Just as the Michigan Earned Sick Time Act was set to go into effect on February 21, 2025, the Michigan Legislature came to an agreement to revise the Act. The Bill (HB 4002) was promptly signed by Governor Whitmer and became effective February 21. The Act still provides guarantees to Michigan workers for paid sick time while also providing employers with improved flexibility in implementing their paid sick time policies. There are, however, several changes in the revised Act compared to its prior iteration of which employers should be aware.
One notable change is to the definition of covered “employee,” which now includes several exclusions. Specifically, the following individuals are now expressly excluded from the Act’s coverage:
an individual employed by the federal government;
an individual who works under a policy where both of the following conditions are met: (a) the policy allows the individual to schedule the individual’s own working hours; and (B) the policy prohibits the employer from taking an adverse employment action if the individual does not schedule a minimum number of hours;
an unpaid trainee or intern; and
an individual employed under the youth employment standards act.
The definition of covered “employer” was also revised and no longer includes in its definition the term “nonprofit agency.” However, nonprofit agencies are not expressly excluded from the definition, creating an ambiguity as to whether they are subject to the Act.
Small businesses, which continue to be defined as an employer with less than 10 individuals working for compensation in a given week, have until October 1, 2025, to comply with the Act’s requirements. Additionally, newer small businesses which did not employ any employees prior to February 21, 2022, are not required to comply with the Act until 3 years after the first employee is hired.
The revised Act presumes that employers who provide employees with 72 hours of paid earned sick time at the beginning of the employer’s chosen benefit year to be compliant with the minimum sick time accrual requirements. Otherwise, covered employees are entitled to accrue paid earned sick time at the rate of one hour for every 30 hours worked. The revised Act does not require an employer that frontloads sick leave at the beginning of the year to: (1) allow an employee to carry over any used paid sick time from one year to the next; (2) calculate and track accrual of paid sick time; or (3) pay the employee the value of unused accrued paid sick time at the end of the year. For employers that choose to use the calendar year as their 12-month period, the Act does not expressly state whether the frontloaded amount can be prorated for 2025 (starting February 21) or whether employers who choose to frontload are required to provide the full 72 hours for 2025.
When the new changes are effective, small businesses are permitted to frontload a minimum of 40 hours of paid earned sick time at the beginning of the year without having to track the employee’s accrual of earned sick time. The revised Act removes the requirement for small businesses to allow employees to use up to an additional 32 hours of unpaid leave that was afforded in the previous version of the Act.
Additionally, the revised Act allows employers who employ part-time employees to provide their yearly balance of paid earned sick time at the beginning of the employer’s year so long as: (1) they also provide written notice of the employee’s anticipated hours worked for the given year; (2) the amount of earned sick time to be provided for that year is proportionate to the amount of sick time that the employee would accrue if they worked all the anticipated hours; and (3) the employer provides additional paid earned sick time hours should the employee work more hours than anticipated.
The medical documentation requirements had only minor changes, while there are additional provisions to the notice requirements. Specifically, employers may request reasonable documentation within 15 days but can only require it when an employee takes more than three (3) consecutive days of sick leave. The documentation should only require a signature by a health care professional confirming the use of sick time was for a purpose listed under the Act. If an employer requires documentation, the employer must pay “all out-of-pocket expenses the employee incurs in obtaining the documentation.” The employer is also responsible for paying “any costs charged to the employee by the health care provider for providing the specific documentation required.” The revised Act, however, does not explain what is included in either “out-of-pocket expenses” or “costs.”
For notice purposes, when the use of sick leave is not foreseeable, an employee only needs to give notice as soon as practicable or in accordance with the employer’s written policy related the request to use sick time. When the use of sick is foreseeable, an employer can require notice of the use of sick leave up to seven (7) days before the employee intends on initiating sick leave.
The Act prohibits an employer from treating an employee’s use of earned sick time as an absence that may lead to adverse employment actions. Thus, employers should be careful when enforcing their time and attendance policies to avoid any potential conflicts with the Earned Sick Time Act.
Employees who believe their employer violated the Act may file a claim with the Department of Labor and Economic Opportunity within three years. The revised Act, however, no longer permits an employee to directly file a lawsuit.
Decoding the Independent Agency Executive Order: Implications for the Activities of Federal Agencies and Business Interests
The Ensuring Accountability for All Agencies Executive Order (the “Independent Agency EO”), signed by President Trump on February 18, extends unprecedented direct Administration control over independent regulatory agencies, such as the Federal Communications Commission, the Securities and Exchange Commission, the Federal Trade Commission, and the Federal Energy Regulatory Commission, among others.1 The Independent Agency EO requires, inter alia, the submission of “major regulatory actions” of independent agencies to the Office of Management and Budget’s (OMB), Office of Information and Regulatory Affairs (OIRA) in the White House, imposing OIRA review and approval requirements on these agencies regulatory actions. Such review, to this point, has been limited to actions of cabinet-level executive branch departments (and their respective components and agencies), such as the Departments of Justice, Commerce, Agriculture, Homeland Security, Energy, and Transportation, over which the President has plenary authority, including with respect to their regulatory activities and actions, and the hiring and firing of political appointees, who serve at the President’s pleasure.
In addition, on February 19, the President signed a follow-on Executive Order to implement its Department of Government Efficiency (DOGE) deregulatory initiative (the “Deregulation EO”), directing all Agency heads, including those of independent agencies, to initiate a process to review all regulations under their jurisdiction for consistency with law and the Administration’s policy objectives. Agency heads were also directed, within 60 days (by April 20) to identify and submit to OIRA, regulations that are within one of seven classes that meet the Administration’s criteria for inconsistency with law and its policy objectives.
Key Takeaways:
The Independent Agency EO purports to exert unprecedented direct presidential control over independent agencies, which were created by Congress as governmental agencies outside the President’s Administration in order to insulate them from direct political influence and control.
The order requires White House review of agency action, likely to slow the regulatory process and create uncertainty for business, though also providing business with a second “bite at the apple” to pare back or outright block particular agency regulatory initiatives through the OIRA process.
The Independent Agency EO, together with the Deregulation EO, are additional elements of efforts by the Trump Administration to limit the so-called “Administrative State”, and are simultaneously coupled with the assertion by the Administration of the President’s authority to remove independent agency heads and other political appointees at will, rather than for cause or under other criteria specified in the agency’s enabling statute. Challenges to two such removals are pending in federal court, and the acting U.S. Solicitor General has indicated in a letter to Senator Dick Durbin, ranking member of the Senate Judiciary Committee, that “certain for-cause removal provisions that apply to members of multi-member regulatory commissions are unconstitutional and that the Department [of Justice] will no longer defend their constitutionality.”
Together, these initiatives could provide the Administration with the ability to exert more direct control and influence over independent agencies, including to advance various Administration priorities, most obviously surrounding DEI, green energy, political speech, and others that will come into focus over time. In addition, the Deregulation EO’s call for an accelerated review for consistency with the Administration’s deregulatory and other policy objectives could potentially prompt some unexpected initiatives from the independent agencies.
Background
Independent regulatory agencies are quasi-legislative bodies created by Congress, that are outside the Administration yet technically are considered within the executive branch of the federal government. Independent agencies have historically acted independently from oversight and direction from the President’s administration in their rulemaking and other activities, with their power delegated by Congress through the agency’s enabling statute. The extent of the President’s authority over independent agencies has generally been thought to be limited by the provisions of an agency’s enabling statute, which typically does not extend beyond the President’s authority to appoint agency heads and senior governing officials (such as commissioners and board members), with the advice and consent of the Senate.
The Supreme Court has long held that independent agency political appointees cannot be removed without cause or in accordance with an agency’s enabling statute, which is in contrast with executive department heads serving in the President’s cabinet and other executive department political appointees, who serve at the pleasure of the President and may be removed at will. The President is now asserting the authority to fire independent agency political appointees at will, an issue which is currently pending in two federal court cases, as discussed further below.
OIRA is an office within OMB tasked with, under the 1993 Regulatory Planning and Review EO 12866 (as supplemented by 2011 EO 13563), reviewing and approving executive agency regulatory actions, ensuring compliance with executive orders, and coordinating the Administration’s policies among the cabinet-level executive departments and their component agencies. Prior to the Independent Agency EO, under EO 12866, only the regulatory actions and activities of executive departments, their agencies and components have been subject to OIRA review, which excludes “independent regulatory agency” from the definition of “agency” for purposes of EO 12866 compliance.2
The Executive Order
The Independent Agency EO declares that “[i]t shall be the policy of the executive branch to ensure Presidential supervision and control of the entire executive branch,” which President Trump says includes “the so-called ‘independent regulatory agencies.’” In accordance with this policy, all proposed and final “significant regulatory actions” must be submitted to OIRA for review and approval before the action is published in the Federal Register, removing a major element of these agencies’ independence. The OIRA submission requirement kicks in April 19, 2025 (or sooner if OMB releases new guidance before that date).
The Independent Agency EO also:
Details new protocols that OMB may coordinate and review with the agencies to ensure alignment with the Administration’s policies and agenda, including a provision directing OMB to establish performance standards for each independent agency head and requiring the periodic submission of reports to the president on each agency head’s “performance and efficiency.”
Requires each independent agency to create a White House liaison position within their agency and coordinate its policies and priorities with the White House.
Asserts that the President and Attorney General (subject to the President’s supervision), shall provide authoritative interpretations of law for the executive branch, and provides that no employee of the executive branch (which presumably includes employees of independent agencies) “may advance an interpretation of law as the position of the United States that contravenes the President’s and Attorney General’s opinion on the matter.”
Additional Considerations and Observations
As noted, the related question of whether the President may remove political appointees of an independent regulatory agency, which likewise implicates the authority of the President over these agencies, is simultaneously making its way through the courts, with the acting Solicitor General asserting in Congressional correspondence that the Department of Justice will no longer defend the constitutionality of for-cause removal provisions in independent agency enabling statutes. In one case pending before the U.S. District Court for the District of Columbia, the court temporarily stayed the President’s removal of the head of the Office of Special Counsel, with the Administration’s Application to the Supreme Court to vacate the stay held in abeyance pending further proceedings before the District Court on issuance of a preliminary injunction. In a second case, a challenge to the President’s firing of a member of the National Labor Relations Board is pending before a U.S. District Court in D.C., with an expedited briefing schedule and hearing set on the removed official’s motion for summary judgment.
It is not uncommon for independent agencies, whose head and majority (following appointments to vacancies) are typically of the President’s party, to align with the President on major policy initiatives. This can be seen, for example, from the on-again, off-again history of net neutrality’s treatment by the FCC, which has been directly connected to which party holds the presidency and the Chair and majority at the FCC. In recent comments to the press, FERC Chairman Mark Christie noted this typical pattern of alignment between the Administration in power and independent agencies on major initiatives and suggested that the majority of the consultation-related provisions of the Independent Agency EO appeared consistent with current practices, in some cases going back decades.
That said, what will be different under the Independent Agency EO, together with the authority of the President to fire independent agency heads at will if sanctioned by the Supreme Court, is that these agencies can be expected to become more of a direct instrument of the Administration in advancing its policy agenda. This can be seen most immediately from the FCC’s reported investigation into the DEI practices of an FCC-regulated entity, and the recent announcement by the FTC of an inquiry into policies of social media platforms affecting political speech. In addition, the Deregulation EO direction that all agencies, including independent agencies, identify regulations that are inconsistent with the Administration’s deregulatory and other policy objectives and develop a plan for rescinding or modifying those regulations, could potentially prompt some unexpected initiatives from the independent agencies but also could provide opportunities for regulated entities.
In terms of OIRA review, the executive order will likely slow the regulatory process and agency action, as publication in the Federal Register is to be delayed pending OIRA review for both proposed and final actions. This may be a “good news, bad news story” for businesses with issues before independent regulatory agencies. For those advocating for a particular position adopted by the agency, final action will likely be delayed and could be changed in the OIRA process. For those opposing particular agency action, the OIRA process, which includes consultation with other White House and Cabinet-level departments, as well as the ability of interested parties to comment and meet with OIRA on agency action under review, provides an additional opportunity to influence, and perhaps pare back or block, an agency proposal or final rule.
This order is likely to be subject to a court challenge, like other Trump Administration Executive Orders. Nevertheless, if your business is subject to the regulatory actions of these independent agencies, be prepared for an environment with some higher risks and uncertainty, but also for additional opportunity to engage with political actors in Congress and the Executive Branch, as well as the independent agencies themselves, to check agency action that may be adverse to your company’s interests.
1 The term “independent regulatory agency” is defined by statute in 44 U.S.C. § 3502(5) as the listed federal agencies in that section and “any other similar agency designated by statute as a Federal independent regulatory agency or commission.” In addition to the FCC, FTC, SEC, and FERC, independent agencies identified in that provision include the Federal Housing Finance Agency, the Federal Maritime Commission, the Interstate Commerce Commission (which was abolished in 1995, with the newly created Surface Transportation Board succeeding to its rail industry regulatory functions), the National Labor Relations Board, the Nuclear Regulatory Commission, and the Occupational Safety and Health Review Commission. The Independent Agency EO explicitly includes the Federal Election Commission, but excludes the Federal Reserve and its Federal Open Market Committee, though applies to Fed activities directly related to its supervision and regulation of financial institutions.2 Separately, in a process that companies with business before independent agencies may be familiar with, OIRA has explicit statutory authority under the Paperwork Reduction Act, 44 U.S.C. 3501, et seq., to review actions of any executive department or other entity in the executive branch, as well as of independent regulatory agencies, that require the submission of information to the government, so-called “information collections”. OIRA review of agency information collections under the Paperwork Reduction Act, which is a statutory requirement, is separate and distinct from reviews of executive agency regulatory actions and activities under EO 12866, which has now been extended to independent regulatory agencies by the Independent Agency EO.
GeTtin’ SALTy Episode 47: Texas Legislative Insights, Politics, and State Tax Priorities [Podcast]
In this episode of GeTtin’ SALTy, host Nikki Dobay is joined by colleagues Elizabeth Hadley and Catalina Baron from Greenberg Traurig’s Texas offices to discuss the ongoing Texas legislative session and its implications on state and local tax policy.
Elizabeth is a member of Greenberg Traurig’s Government Law and Policy team and joins the GT SALT team to get in the weeds on Texas policy and politics. The conversation explores the nuances of Texas’s legislative process as well as some of the key priorities the Texas legislature will be focused on this year. Elizabeth goes on to discuss the state’s fiscal health and how it may impact those key priorities, including tax.
Nikki, Elizabeth, and Cat talk about property tax reform, which is on the legislative agenda proposing an increase in homestead exemptions. They also touch on other priorities such as education savings accounts, water infrastructure investments, and bail reform, exploring how these areas might interact with the budget and legislative calendar.
The episode concludes with a discussion about a couple Texas legislative traditions as well as TV guilty pleasures.
Trump Administration Asserts Control Over Independent Agencies
The Trump administration has taken two actions that will dramatically increase White House control over federal commissions, boards, and officials that were previously considered independent. These actions are likely to impact a wide range of industries and sectors of the American economy, including energy, financial services, transportation, healthcare, and many others.
First, President Trump issued an Executive Order (EO) to increase presidential supervision over the “so-called independent agencies.” The EO, entitled “Ensuring Accountability for all Agencies,” is a fundamental change to historical practice where independent agencies like the Securities and Exchange Commission, National Labor Relations Board, and Federal Energy Regulatory Commission fell outside the White House’s regulatory oversight. This EO sets forth new requirements that would formally subject the actions taken by these and other independent agencies to White House control for the first time. The new requirements include:
Regulatory Review
Section 1 of the EO extends to “independent regulatory agencies” the pre-existing requirement that Executive Departments and agencies submit for review all proposed and final significant regulatory actions to the Office of Information and Regulatory Affairs in the Executive Office of the President, before publication in the Federal Register.
Agency Performance
Section 4 of the EO requires the Director of the Office of Management and Budget (OMB) to establish “performance standards and management objectives” for independent agency heads, and to periodically report to the president on these agencies’ progress in meeting the standards.
Funding
Section 5 of the EO requires the OMB director to “adjust” the independent regulatory agencies’ “apportionments” as necessary to advance the president’s policies and priorities. The EO contemplates that OMB may prohibit spending on particular activities.
Regular Consultation With the White House
Section 6 of the EO requires independent regulatory agencies to establish a White House liaison within each agency, who will regularly consult and coordinate with the Executive Office of the President on policies and priorities.
Singular Legal Interpretations
Section 7 provides that the president and the attorney general shall set forth the authoritative and binding interpretations of the law for the entire executive branch.
These requirements are largely aimed at “independent regulatory agencies” as defined by 44 U.S.C. 3502(5), which identifies nineteen independent agencies and includes a catchall clause for “any other similar agency designated by statute.”1 A 2019 opinion from the Justice Department’s Office of Legal Counsel notes that there are potentially several other agencies (beyond those listed) that would fall into the catchall clause, including the United States International Trade Commission.
In a related move, the administration also asserted greater authority to fire certain federal commissioners and other officials “at will” who could previously only be terminated by the president “for cause.” For nearly a century, the prevailing view was that although the president enjoys absolute authority to remove the singular head of an executive agency, Congress could condition the removal of multimember heads of “independent” boards or commissions that Congress designed to be balanced along partisan lines and in which it vested quasi-judicial and quasi-legislative power. That view dates back to the 1935 Supreme Court case of Humphrey’s Executor v. United States; however, many believe that this view may no longer be favored by the current Supreme Court.
The Solicitor General of the United States recently informed Congress that the federal government will “no longer defend the[] constitutionality” of “certain for-cause removal provisions that apply to members of multimember regulatory commissions”—specifically the Federal Trade Commission, National Labor Relations Board, and the Consumer Product Safety Commission—that were permitted under Humphrey’s Executor. Instead, the Department of Justice “intends to urge the Supreme Court to overrule [Humphrey’s Executor], which prevents the President from adequately supervising principal officers in the Executive Branch who execute the laws on the President’s behalf, and which has already been severely eroded by recent Supreme Court decisions.”
These two steps—the “Ensuring Accountability for all Agencies” EO and the Justice Department’s rejection of Humphrey’s Executor—would dramatically increase White House control over federal commissions, boards, and officials which were previously considered independent and insulated from such control.
Article II of the U.S. Constitution vests the president with somewhat opaque “executive” powers. These powers include ensuring that the laws of Congress are “faithfully executed,” which requires some degree of oversight of the officers who actually execute them. The Constitution also permits the president to “require the Opinion” of executive department heads on any subject relating to their duties. While other presidents have not required this level of consultation by independent agency heads, some view the more hands-off approach to regulatory review to be a matter of executive discretion rather than a lack of legal authority. Together, these recent steps by the Trump administration highlight the likely hallmarks of the new legal frontier—one that will test the limits of the president’s constitutional powers.
Key Takeaways
Possible Regulatory Delays While Independent Agencies Adjust to the New Normal
The increased coordination and consultation that is now expected from the White House could result—at least initially—in some delays to the normal decision-making processes of independent regulatory agencies. These agencies will now need to build in an additional layer of review to ensure that certain policy decisions are aligned with those of the administration.
Fewer Open Interagency Disputes
President Trump intends to interact with independent agency heads in the same way as other federal agency heads. Subject to congressional or judicial intervention, it is expected that independent agencies will follow the White House’s lead, particularly given that President Trump has asserted authority to terminate board and commission members without cause. This will likely result in fewer—if any—open interagency disputes, like that which arose in the Bostock case, where the Justice Department and Equal Employment Opportunity Commission took conflicting legal positions on the scope of Title VII. The White House will aim to resolve more policy disputes in the interagency process, perhaps without the regulated community even learning of such disputes.
The Likely Rise of Executive Deference Arguments
Look for the White House to argue that this EO is entitled to deference from the courts, as it relates to the president’s core constitutional powers. While the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo put an end to Chevron deference for agency interpretations of the law, it did not address a different strain of deference where core presidential power is concerned. That form of deference—traditionally invoked to support the executive branch’s preferred national security policies—may well be increasingly invoked by the president and attorney general. President Trump may also assert that the EO should take precedence over existing regulations to the contrary, as the administration has maintained in other contexts.
Increased Opportunities for Engagement
In making these changes, the White House’s stated goal is to increase the public accountability of agencies that have historically exercised significant regulatory control over the American people. By requiring these agencies to coordinate with the White House at an unprecedented level, there may now also be an increased opportunity for regulated parties to be heard on important policy matters.
Footnotes
1 Notwithstanding that definition, the EO 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; it does apply to the Board of Governors’ supervision and regulation of financial institutions.
Trump Administration Rescinds Council on Environmental Quality’s Guidelines, Creating Widespread Uncertainty for the National Environmental Policy Act Compliance by Energy and Infrastructure Projects
On February 19, 2025, the Trump Administration issued an Interim Final Rule rescinding the Council on Environmental Quality’s (CEQ’s) regulations setting forth the requirements for compliance with the National Environmental Policy Act (NEPA). The validity of the CEQ’s NEPA regulations has been cast into substantial doubt by two recent court cases and two of President Trump’s executive orders. Publication of that rule in the Federal Register on February 25 sets in motion the elimination of the CEQ’s NEPA regulations as the binding standards for NEPA compliance, a role they have served since 1978. Without these standards, federal agencies and project developers will need to base their environmental reviews on the vague provisions of the statute. Unless Congress steps in to revise the statute itself, this change creates significant uncertainty for major infrastructure projects and project developers.
Why NEPA Matters
Signed by President Nixon on New Year’s Day in 1970, NEPA requires federal agencies to review the environmental impact of discretionary actions (such as issuing permits). In 1978, in response to an executive order issued by President Carter, the Council on Environmental Quality issued regulations that require all federal agencies to complete an environmental impact statement, an environmental assessment, or to determine that the action qualifies for a “categorical exclusion.”
Compliance with NEPA can create significant uncertainty for projects. Preparation of an environmental impact statement can require years to complete, impacting project timelines. Challenges to the sufficiency of NEPA review are common and can add further years of uncertainty to energy and infrastructure projects.
Recent NEPA Decisions, Executive Orders, and the Interim Final Rule
In the past three months, two court rulings and two executive orders preceded repeal of the CEQ’s NEPA regulations.
On November 12, 2024, the D.C. Circuit Court of Appeals ruled in Marin Audubon Society v. Federal Aviation Authority that the CEQ does not have rulemaking authority and therefore, the CEQ’s NEPA regulations were promulgated without Congressional authorization. The court denied requests for en banc review on January 31, 2025. On February 3, 2025, the District Court for the District of North Dakota decided Iowa v. CEQ, adopting the reasoning of Marin Audubon Society and concluding that the 2024 CEQ NEPA regulations were issued without authority and therefore invalid.
In between those two decisions, on January 20, 2025, the Trump Administration issued Executive Order 14154, revoked President Carter’s executive order that first directed CEQ to issue binding regulations implementing NEPA and directed the CEQ to take action within 30 days to propose recission of the CEQ’s NEPA regulations.
Acting within the required 30 days, on February 19 the CEQ issued the Interim Final Rule proposing the rescission of the CEQ’s NEPA regulations. The Interim Final Rule cites President Trump’s Executive Order 14154 as well as the decisions in Marin Audubon Society and Iowa v. CEQ as grounds for the decision. That Interim Final Order was accompanied by a memorandum, directing federal agencies to “[c]onsider voluntarily relying on [the soon-to-be-rescinded] regulations in completing ongoing NEPA reviews or defending against” challenges to project, and not delaying ongoing NEPA reviews while the NEPA procedures are updated.
Significant Uncertainty Ahead
Unless the Interim Final Rule and the decision in Iowa v. CEQ are overturned on judicial review or Congress takes action to clarify the law, the end of the CEQ’s NEPA regulations will lead to significant legal uncertainty for any project that requires federal approvals.
In light of the Interim Final Rule, federal agencies lack clear guidance regarding whether to voluntarily follow the 2020 CEQ NEPA regulations, or whether to rely on the statutory text and any agency-specific NEPA regulations as the basis for their NEPA reviews. The “voluntary” nature of this directive, as well as differences between the level of detail in individual agency NEPA regulations, could result in inconsistent approaches across agencies.
That uncertainty will provide additional grounds for challenges to forthcoming NEPA reviews through litigation, especially if the validity of the Interim Final Rule itself faces a protracted challenge in federal court. Until federal courts establish a new “doctrine” for sufficiency of NEPA review in the post-CEQ NEPA regulations world, the future for NEPA lawsuits will likely be fact- and court-specific, potentially leading to variation between circuits and greater uncertainty for infrastructure projects.