President Donald Trump issued an Executive Order (EO) titled "Zero-Based Regulatory Budgeting to Unleash American Energy" on April 9, 2025. The EO directs various federal agencies – including the U.S. Environmental Protection Agency, U.S. Department of Energy, Federal Energy Regulatory Commission (FERC) and Nuclear Regulatory Commission – to incorporate a conditional sunset provision by Sept. 30, 2025, for specified "Covered Regulations" that these agencies are authorized to enforce under their governing statutes.
Specifically, the EO's proposed sunset rule would establish that a Covered Regulation would expire after one year, although the agency would have discretion to extend this deadline up to five years. The EO requires the covered agencies to coordinate with the Department of Government Efficiency and the Office of Management and Budget (OMB). Importantly, the EO does not apply to regulatory permitting regimes authorized by statute. Moreover, the OMB director may exempt a new regulation or amendment from the sunset rule if he determines that the new regulation or amendment has a net deregulatory effect.
Notably, the EO requires the covered agencies to offer the public an opportunity to comment on the costs and benefits of each Covered Regulation, such as through a request for information, prior to a rule's expiration.
Implications for FERC
For FERC, the EO covers all regulations issued by the agency under the Federal Power Act, the Natural Gas Act, and the Power Plant and Industrial Fuel Use Act. On its face, implementation of the EO would present FERC with an enormous challenge in achieving legally durable results.
On that score, a recent conference hosted by the Edison Electric Institute featured comments by former FERC General Counsel Matthew Christiansen. In particular, Christiansen focused on the conundrum of achieving compliance with the EO in a manner consistent with the Administrative Procedure Act (APA). Christiansen noted that the EO does not elaborate on how its projected implementation would adhere to APA, even though such adherence would be crucial for FERC to reach legal durable outcomes.
To implement the EO while adhering to the APA, Christiansen said he thought FERC would have to announce a proposed amendment to its rules under the Code of Federal Regulations (CFR). The APA requirement, in turn, would require a sunset-related notice and comment proceeding for every single provision in the CFR under the agency's purview not expressly exempted by the EO. In Christiansen's view, he said, this represents the most reasonable reading of the EO's cost-benefit comment opportunity and produces an extremely tight timeline for FERC to meet the procedural requirements of the APA.
According to Christiansen, the challenge for FERC will be complying both with the EO's cost-benefit commentary provision and the broader scope of review mandated by the APA's notice and comment procedures. The latter likely would require further steps, such as considering whether energy service rates under FERC's jurisdiction would remain just and reasonable and not unduly discriminatory, in the absence of the regulation under review. Essentially, FERC would have to treat the cost-benefit comment opportunity required by the EO as a full notice and comment proceeding, which is FERC's current practice to comply with the APA.
As a practical matter, Christiansen said, neither FERC staff nor industry stakeholders under the agency's jurisdiction likely have the capacity to comment on each and every agency regulation in this manner.
Another uncertainty will be how FERC implements the EO in light of the U.S. Supreme Court's 2024 decision in Loper Bright Enterprises v. Raimondo, which repealed the long-standing doctrine of Chevron deference. So if an appeal of FERC's implementation of the EO is challenged in federal court, the reviewing appellate court would no longer be required to defer to the agency's interpretations of ambiguous statutory provisions and would have the opportunity to exercise its own independent judgment in interpreting such provisions.
Takeaways
As Christiansen's comments indicate, complying with both the EO and the APA would pose a monumental task for FERC. Moreover, the prospect of delays due to court challenges further complicates implementing the EO on its prescribed timetable. Accordingly, affected parties should wait and see how any legal challenges to the EO unfold before substantially altering their compliance with relevant FERC regulations. However, there likely will be opportunities for affected parties to participate in notice and comment proceedings before the relevant FERC regulations expire.
Furthermore, now that the federal courts are no longer bound by Chevron deference as precedent, reviewing courts may have their own views on the implementation of the EO in light of the relevant statutory frameworks.
