On January 20, 2017, President Trump took his oath of office and became the 45th President of the United States of America. On Saturday, January 21, 2017 at 7:23 a.m. EST, despite dire predictions to the contrary, the sun rose once again in the east. In the short time since he assumed the office of the President, Donald Trump has already issued a number of Executive Orders (EOs) covering a host of different areas. While there is a tendency to assume that many of these EOs will have an immediate and profound effect on the country, including the government contract community, this is simply not the case.
The Executive Branch has many tools at its disposal for expressing policy preferences and implementing statutes passed by Congress. Agencies can issue regulations and discretionary guidance. The President can sign, revoke, or choose not to enforce or defend Executive Orders. When assessing the impact of a proposed regulation, rumored revocation of a previous administration's policy, or shiny new EO, it is critical to take a step back and consider what action the administration is taking, including the type of EO at issue.
For example, on January 25, 2017, President Trump signed Executive Order 13767 regarding the building of a wall on the border between the United States and Mexico. On January 26, 2017, there was not a mass exodus of people from various parts of the country, shovels in hand, to commence immediately building the wall. The government did not instantly break ground because most EOs are directed to the heads of Executive agencies. Essentially, they are statements of the President's policy priorities, expressed in the most formal manner possible. As a result, they are only "politically enforceable" by the President against his appointees. In addition, the vast majority of EOs do not grant rights to third parties and are not enforceable in court. Compare these EO attributes to rules and regulations issued by Executive agencies, which have the force and effect of law. Most regulatory statutes delegate rulemaking authority to the heads of Executive agencies, and, in the vast majority of cases, the President cannot himself impose changes on such regulations. Rather, it is only the agency heads who have the authority to revoke or modify a rule, a process that can easily take more than a year because of the requirements of the Administrative Procedure Act (APA).1
This being said, the White House staff will work with the agency heads to ensure that they comply with the President's wishes. Moreover, there are some EOs that implement authority delegated directly to the President by Congress. Unlike the "politically enforceable" EOs mentioned above, the Trump White House would have to comply with any requirements under such a statute before issuing or revoking these EOs. For example, pursuant to the Federal Property and Administrative Services Act of 1949 (the Procurement Act), 40 U.S.C. §§ 101 et seq., the President has a "broad-ranging" statutory authority to establish rules governing federal contractors, as long as there is a "'sufficiently close nexus' to the values of providing the government an 'economical and efficient system for ... procurement and supply.'" See UAW-Labor Emp't & Training Corp. v. Chao, 325 F.3d 360, 366 (D.C. Cir. 2003) (citing AFL-CIO v. Kahn, 618 F.2d 784, 788, 792 (D.C. Cir. 1979)). President Obama issued Executive Order 13658 under this authority to set a minimum wage for employees of federal contractors. See 79 FR 9851. President Trump could not issue his own directive revoking this EO without similarly complying with the Procurement Act's requirements.
EOs that are "politically enforceable" can be repealed immediately by a new President, by the simple act of issuing a new Order invalidating it. However, President Trump need not repeal an EO with which he disagrees. He can simply tell his staff to ignore his predecessor's EO and not to take any disciplinary action against an agency that does not comply with it. This happens frequently when a new President does not want to take the political heat for formally and visibly abandoning a policy of his predecessor. But this approach does not impact any rules issued by federal agencies. Government contractors should be mindful of the fact that the President cannot invalidate or modify those final agency actions by executive fiat. Those actions remain in full force and effect unless revoked or amended under the agency's authorizing statute and the Administrative Procedure Act, or unless they are declared invalid by a reviewing court.
As a result, what usually matters most is not the issuance of the Order but the actions taken by the agencies under the authority granted by their organic statutes to implement the President's policies set forth in an EO. Government contractors should always keep in mind that there may a significant delay between an EO from the White House and concrete implementation in the form of final agency rules. For example, EO 13672 (which prohibited employment discrimination based on sexual orientation and gender identity by federal contractors) was signed on July 21, 2014, and the final rule fully implementing it became effective on January 11, 2016. See 79 FR 42971; 80 FR 54934. President Obama also issued EO 13556 concerning the uniform safeguarding of unclassified information on November 4, 2010. See 75 FR 68675. The final rules implementing this EO did not become effective until November 14, 2016. See 32 CFR Part 2002, 81 FR 63324.
So, while the country should expect the new administration to continue to issue executive orders, it should not conclude that each EO will result in a sea change. Venable's Government Contracts Group will keep you updated on the issues that could have an immediate impact on your company.