In recent months, we’ve seen a notable surge in executive orders issued by the Trump administration. Without getting too political, and while this may seem sudden, it’s important to recognize that such activity is not unique to any one president. Each new administration typically issues a wave of executive orders that shape and redirect federal policy.
To make sense of this, let’s take a closer look at what an executive order actually is, what it can and cannot do, and how it fits into the broader legal framework that includes statutes, regulations, and the U.S. Constitution.
What Is an Executive Order?
An executive order is a directive issued by the sitting President of the United States that outlines how the executive branch should interpret and enforce existing laws. These orders are a key tool the president uses to manage operations within the federal government.
For example, one of the first executive orders issued under the Trump administration directed federal agencies to eliminate ten existing regulations for every new regulation proposed. This directive reflects the administration’s priorities for regulatory reform and is a clear example of how executive orders are used to influence agency behavior.
What Can Executive Orders Do?
Executive orders can serve several critical functions, including:
- Establishing enforcement priorities: The president has the constitutional responsibility to “take care that the laws be faithfully executed.” Through executive orders, the president can signal how the executive branch should prioritize enforcement of existing laws.
- Directing budgetary execution: While Congress holds the power of the purse, the president is responsible for executing the federal budget. Executive orders may reflect how resources should be allocated within the limits of congressional appropriations.
- Managing federal agencies: The president has the authority to appoint and remove agency heads and may issue executive orders to guide agency operations or administrative policy.
What Are the Limitations?
Despite their power, executive orders are not limitless. They cannot:
- Override the Constitution: Executive orders must operate within constitutional bounds. If an order contradicts constitutional provisions, it is subject to invalidation by the courts. Several high-profile cases have affirmed this limitation.
- Replace legislation: Executive orders are not statutes. They do not have the force of law in the same way that legislation passed by Congress and signed by the president does. A president cannot use an executive order to enact new laws or override existing congressional mandates.
- Defy Congressional intent: While executive orders can shape how laws are enforced, they cannot simply disregard or nullify federal laws enacted by Congress. Attempts to do so often face legal challenges and judicial review.
The Legal Landscape
It’s not uncommon for executive orders—especially those seen as pushing the boundaries of presidential authority—to face scrutiny in court. In such cases, the judicial branch may determine whether the order stands or is struck down.
Understanding executive orders requires placing them in context: they exist alongside existing statutes, prior executive orders, regulatory frameworks, and the Constitution. Their power lies in directing how the executive branch implements laws, not in creating or repealing laws themselves.
Shifting Priorities: Executive Orders Across Administrations
One consistent theme across presidential transitions is the reversal or redirection of prior executive orders. It is common for a new administration to rescind or replace executive directives issued by its predecessor—often signaling a significant shift in federal policy.
A notable example of this involves executive orders related to Environmental, Social, and Governance (ESG) reporting. The previous administration implemented policies influencing how the Securities and Exchange Commission (SEC) approached ESG disclosures. In contrast, the current administration has rolled back many of those initiatives and taken the SEC in a different direction, illustrating the pendulum swing that can occur with a change in leadership.
How Executive Orders Reset Federal Direction
There are several key ways an executive order can influence policy implementation. One of the most impactful is the resetting of enforcement priorities.
1. Deprioritizing Enforcement
Executive orders may direct federal agencies to deprioritize the enforcement of specific statutes or regulatory requirements. A recent example involves the Corporate Transparency Act and its beneficial ownership reporting requirements. Under that law, corporations, LLCs, and similar U.S. entities must report information about individuals who own or control them. This information is submitted to the Financial Crimes Enforcement Network (FinCEN), a bureau within the U.S. Department of the Treasury.
Although the rulemaking process for this requirement was finalized after several years of preparation, the current administration has announced it will not prioritize enforcement of the rule at this time. Since FinCEN operates under the Treasury Department—and the Treasury Secretary is appointed by the president—the executive branch holds significant influence over how and when such regulations are enforced.
2. Prioritizing Enforcement
Conversely, executive orders can also signal a renewed focus on enforcement. A highly visible example is the recent shift in immigration enforcement policy. The prior administration adopted a more limited enforcement strategy, focusing on select categories of immigration violations. The current administration, however, has markedly increased immigration enforcement efforts, signaling a broader and more aggressive application of existing immigration laws.
This ability to both escalate and relax enforcement priorities underlines the significant operational impact of executive orders, even though they do not carry the force of law in the same way as legislation. It also highlights the importance of understanding not only what the law says, but how it is applied—because executive orders shape much of the practical reality.
Executive Orders and Budget Execution
Another common use of executive orders involves setting budgetary priorities. While the federal budget begins in the House of Representatives, moves through the Senate, and is ultimately signed by the President, the execution of that budget rests with the executive branch.
Once enacted, a federal budget—often stretching over a thousand pages—does not dictate the granular details of how every dollar is to be spent. Instead, it provides broad allocations and categories. Within those boundaries, the President and the executive agencies retain significant discretion in determining:
- The timing of expenditures: Agencies may delay or accelerate spending depending on executive direction.
- Funding emphasis: Some programs may be prioritized and receive funds quickly, while others may face slower disbursement or be sidelined entirely.
- Operational execution: Agencies might be instructed to ramp up or scale down certain programs based on policy goals.
For example, while a statute may authorize a particular initiative, failure to allocate funds—or delays in doing so—can effectively stall implementation. This budgetary discretion allows the President to influence policy indirectly, simply by controlling the pace and structure of financial execution.
Treasury also plays a key role in fiscal management, operating under executive direction. This dynamic means that budget execution can become a powerful policy tool even after Congress has completed its legislative role.
Executive Orders as Agency Directives
Executive orders are also frequently used to direct federal agencies. These directives can cover a wide range of administrative actions, including:
- Staffing adjustments: Orders may call for staff reductions or reorganization within agencies.
- Regulatory enforcement: Presidents may instruct agencies to deprioritize enforcement of specific statutes or, conversely, to increase enforcement efforts in targeted areas.
- Rulemaking priorities: Agencies may be ordered to expedite, revise, or rescind regulations depending on evolving policy objectives.
In this way, executive orders can serve as operational blueprints, guiding how agencies interpret and implement laws. While the White House does not control every detail, it often delegates broad authority to agency heads to carry out its strategic objectives.
Executive Orders vs. Congressional Statutes
Understanding the difference between executive orders and congressional statutes is key to appreciating the limitations and volatility of executive authority.
- Statutes are laws passed by both houses of Congress and signed by the President. They carry the full weight of federal law and remain in effect until formally repealed or amended through the same legislative process.
- Executive Orders, on the other hand, are directives from the President to the executive branch. They do not require congressional approval and can be issued or revoked with relative ease.
As a result, statutes tend to be more durable and less subject to the changing tides of presidential administrations. Executive orders, by contrast, often reflect the policy priorities of the current president and are more likely to be revised, reversed, or replaced by subsequent administrations.
Legal Boundaries and the Real-World Limits of Executive Orders
While executive orders are powerful tools for directing federal policy, they are not without constraints. There are several key legal limitations that define how far an executive order can go:
- Executive orders cannot override statutes. If Congress has passed a law and it remains in effect, an executive order cannot simply cancel or contradict it.
- Executive orders cannot override the Constitution. The Constitution remains the supreme law of the land, and any executive directive that runs contrary to its provisions will likely be struck down in court.
- Executive orders generally cannot overturn Supreme Court rulings. While there may be limited administrative maneuvering around a narrow ruling, the vast majority of Supreme Court decisions must be respected by the executive branch.
Presidential administrations vary in their use of executive orders—some being more aggressive than others. When an executive order conflicts with existing statutory or constitutional law, it frequently triggers legal challenges. These disputes can unfold in the courts or even within executive agencies themselves, where officials may question how far they can go in carrying out an order without crossing legal boundaries.
This uncertainty creates delays, disputes, and ultimately litigation. Businesses, agencies, and individuals are left asking: Is this a lawful executive order? How will it be enforced? And what does this mean for me?
Case Study: Affirmative Action
To illustrate how these dynamics play out in the real world, consider the example of affirmative action. For more than 40 years, affirmative action policies have influenced federal hiring practices and those of government contractors. Originally established in the wake of the Civil Rights Movement, these policies aimed to address long-standing discrimination by encouraging the hiring of minority and underrepresented candidates.
These initiatives were implemented through a combination of executive orders and congressional legislation. Over time, court rulings also helped define the scope and boundaries of affirmative action policies in both public and private sectors.
However, in recent years, we have seen new executive orders issued with the goal of repealing or scaling back affirmative action programs. These efforts have led to legal and administrative conflict. Why? Because although the executive orders that originally established affirmative action may be undone by subsequent orders, many of the same principles are now embedded in congressional statutes. Additionally, decades of legal precedent support some of these hiring practices.
This means that the attempt to roll back affirmative action by executive order alone will face substantial resistance—not only from federal agencies, but from the courts as well. The result is a complex legal landscape where policy shifts through executive orders must contend with a deeper web of statutory and judicial authority.
Looking Ahead
As these issues work their way through litigation and regulatory interpretation, the extent to which new executive orders can reshape established practices remains to be seen. Much will depend on how courts interpret the reach of these orders—and, of course, on the outcome of future elections.
Each new administration brings its own policy priorities. And with that, executive orders will continue to serve as one of the most immediate ways a president can leave a mark—though not always without challenge.
Executive Orders and the Challenge of Deregulation
The final executive order I’d like to highlight is one that exemplifies the complexity of deregulation. Early in President Trump’s administration, an executive order was issued directing federal agencies to eliminate ten existing regulations for every new one they proposed. The aim was to streamline federal oversight and reduce regulatory burdens on businesses.
While this directive was symbolically powerful, its practical execution introduced significant legal and administrative challenges. Many federal regulations are not arbitrary—they exist because Congress, through legislation, has mandated that agencies implement them. In other words, a regulation may not simply be eliminated because doing so would violate statutory obligations.
This creates a difficult tension: an agency may be legally required to issue a new regulation under current law, but the executive order insists that ten existing rules must first be repealed. What happens when those ten rules are also congressionally mandated or critical to the agency’s mission?
In reality, many agencies have struggled to reconcile this deregulation order with their legal duties. Over the past few years—and continuing today—we’ve seen agencies wrestling with how to comply with both congressional mandates and executive directives. This dynamic creates uncertainty across the regulatory landscape:
- Which regulations will stay?
- Which may be repealed or deprioritized?
- How will enforcement evolve?
Navigating a Shifting Policy Landscape
Looking ahead, the regulatory environment will likely remain unpredictable. We can expect continued oscillation as new executive orders are issued, old ones are revoked, and agency priorities shift in response. Federal agencies will keep issuing guidance reflecting both presidential direction and judicial interpretation, leading to frequent updates in enforcement posture.
From a long-term perspective, it’s crucial to recognize that executive orders are inherently transitory. A policy implemented today through executive action can just as easily be reversed in the next administration—or the one after that.
What This Means for Businesses
For businesses and organizations seeking to comply with federal law and align their strategies with policy, the key takeaway is this: don’t anchor your long-term plans solely on executive orders.
While these directives can offer insight into a president’s priorities and agency direction, they are not permanent fixtures of law. As you adjust operations or make strategic decisions:
- Stay informed about current executive policies.
- Monitor relevant legislation and court decisions.
- Be aware of how quickly executive orders can change based on electoral outcomes.
Understanding the difference between statutory mandates, judicial rulings, and executive orders is essential for risk management and long-term planning.
Farley Law specializes in working with both community banks and small businesses. If you are interested in learning more about these or any other income-generating activities for banks, please feel free to contact us at Farley Law, where we help our client financial institutions develop new products and financial services.