President Trump signed on April 9, 2025 an executive order titled Zero-Based Regulatory Budgeting to Unleash American Energy that seeks to deregulate the energy industry by directing various governmental agencies–the Environmental Protection Agency, Department of Energy, Federal Energy Regulatory Commission (FERC), Nuclear Regulatory Commission, five subcomponents of the Department of Interior, and the U.S. Army Corps of Engineers–to incorporate sunset provisions into their regulations governing energy production. The order’s effect, however, may create regulatory uncertainty that could discourage new capital investments in needed energy infrastructure.
The executive order lists the respective statutes from the past hundred years that have vested authority in the respective agencies to promulgate regulations around specific functions. Those covered regulations include ones pertaining to the Federal Power Act, Natural Gas Act, Atomic Energy Act, Energy Policy Act (1992 and 2005), among others. For existing regulations, agencies must issue a sunset rule by September 30, 2025 that makes the covered regulations expire after one year if not extended before the expiration date (e.g., September 30, 2026). For new regulations, agencies must include a sunset date no more than five years in the future; this will require agencies to revisit regulations every five years and offer a public opportunity to comment on the costs and benefits of each regulation. If the agency determines a regulation is still in the best interest of the public, then they may extend it up to another five years for an indefinite number of times. Otherwise, the regulation will expire on its sunset date. The Office of Management and Budget may exempt a new regulation from the sunset orders if it deems that it has a net deregulatory effect.
The executive order also provides an exemption for “permitting regimes” with the aim to ensure certainty for long-term development projects. It is unclear which regulations would be deemed as permitting regimes and therefore exempt from the sunset rule, given that many regulations may include provisions for permitting along with other topics. While the order will likely succeed in expiring outdated and redundant regulations, it will create an extra regulatory burden for many agencies that are already facing a downsizing in staff. This may lead to the accidental expiration of some important energy regulations that the agencies lack the bandwidth to extend before their sunset date.
The effect of this order on FERC may be on the margins. FERC has issued many regulations pursuant to the Federal Power Act and Natural Gas Act. These include detailed regulations governing utility accounting, utility rates, and open-access, non-discriminatory electric transmission and gas transportation services. Despite a requirement for periodic review, these foundational agency regulations are unlikely to be repealed. Furthermore, the order does not require FERC to sunset and review its regulations under the Public Utility Regulatory Policies Act (PURPA), which FERC recently undertook in Order No. 872 in 2020. The permitting exception would appear to leave untouched FERC regulations governing its review of proposals to build new natural gas pipelines, natural gas and storage facilities, and liquefied natural gas terminals, or its licensing of non-federal hydropower projects.
Below is the list of covered agencies and regulations. If you have questions about how this executive order may impact your business, please contact the authors of this Alert or your McCarter lawyer.
**NOAA Fisheries (National Marine Service) administers the Magnuson-Stevens Fishery Conservation and Management Act, along with portions of the Marine Mammal Protection Act
* Ryan Madsen, a law clerk at McCarter & English not yet admitted to the bar, contributed to this alert.
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