Recent White House orders and a US Justice Department letter raise questions about the extent of future independence for the Federal Energy Regulatory Commission and similar agencies.
While the actions are in the early stages, they raise questions about whether the White House will try to exert greater control over FERC — a move that some energy experts say could transform the independent agency and cause uncertainty for energy stakeholders and investors who rely on the commission for permitting and utility filing approvals.
President Donald Trump issued an executive order Feb. 11 directing federal agencies to consult with Elon Musk's Department of Government Efficiency on hiring career staff and to prepare for "large-scale" reductions in force. Under the order, the White House Office of Management and Budget (OMB) is tasked with creating a plan for reducing the federal workforce.
Agencies would only be able to hire one employee for every four that depart, the order said. They would also need to consult the Department of Government Efficiency to create a "data-driven" plan ensuring hiring is done only in essential areas.
Separately, the acting US Solicitor General wrote in a memo Feb. 12 that the Justice Department would no longer defend the constitutionality of "for cause" removal protections for commissioners at some independent agencies.
Order details
The Feb. 11 executive order directs agency heads to prioritize removing employees whose job functions are not mandated by statute and those "not typically designated as essential" during a government shutdown.
Within 30 days, agency heads are directed to submit a report to OMB discussing the statutory support for agency sections and whether any units should be cut or consolidated.
Since FERC collects user fees to support its funding, the commission has typically retained enough funding to avoid furloughs during a government shutdown. However, the agency's 2023 plan said that in the event of a lapse in appropriations, FERC would retain 60 employees and 18 contractors — representing about 4.9% of the agency's total staff — to carry out excepted activities, while 1,506 employees would be subject to furloughs.
So far, FERC has received less focused attention from Musk's team, which has sought to sharply curtail the US Agency for International Development, the Consumer Financial Protection Bureau and the Department of Education.
Like staff at other agencies, FERC staff have been offered inducements to resign and face upcoming return to office requirements.
Efforts to reduce staff have received some opposition from industry stakeholders who argued that dramatically reducing staff could leave developers open to legal risks and lead to substantial permitting delays.
Some of FERC's functions are important for Trump's "unleashing American energy" agenda, such as its role in approving natural gas infrastructure and ensuring the reliability of the electricity grid.
"The President has taken a strong position in favor of advancing American energy dominance, which requires a commitment to expanded infrastructure," said Scott Segal, partner at law firm Bracewell LLP. "A fully staffed FERC is critical to development of new energy infrastructure necessary to maximize the value of increased domestic energy production."
FERC Chairman Mark Christie has already expressed concern about the risks of losing highly specialized staff who are essential to getting pipeline permits processed.
Tyson Slocum, director of Public Citizen's Energy Program, said that FERC processes "an incredibly high volume of rate filings" and monitors markets.
"There's a lot of folks at FERC that could be deemed essential staff," he said.
Travis Fisher, director of energy and environmental policy studies at the Cato Institute, said he does not see FERC's core statutory authorities changing based on the executive order.
"When it comes to FERC, I see most of the opportunity to return to its statutory roots on the policy side rather than via personnel actions," Fisher said. "For example, FERC has a great opportunity to push back against district courts and reject the idea that it should be a greenhouse gas regulator. Congress never gave it that mission."
FERC's independence
At FERC, much may initially rest on whether Christie determines the commission can or should comply with the executive order.
Trump's executive order defines agencies in a way that declines to exclude independent agencies such as FERC. The commission did not immediately comment on the order.
In a recent interview, Christie offered the view that FERC is independent in regard to its regulatory authorities. But on administrative matters, "we're not in a vacuum," Christie said Jan. 31. "For decades, FERC has had to follow guidance on personnel matters up to a degree."
A clause in the Department of Energy Organization Act — which established FERC as an independent agency — provides the commission with the authority to "appoint, prescribe the duties, and fix the salaries of a secretary, a chief engineer, a general counsel, a solicitor, and a chief accountant; and may, subject to the civil service laws, appoint such other officers and employees as are necessary in the execution of its functions."
Trump, however, already appears to be testing the scope of the president's ability to remove independent agency political appointees through early actions at the National Labor Relations Board and the Equal Employment Opportunity Commission.
Sarah Harris, acting US Solicitor General, said in a Feb. 12 letter to US Sen. Dick Durbin (D-Ill.), ranking member of the Senate Judiciary Committee, that the DOJ does not believe removal protections are constitutional for the Federal Trade Commission, the National Labor Relations Board and the Consumer Product Safety Commission.
As is the case under laws governing the FTC, the president can only remove a FERC commissioner for "inefficiency, neglect of duty or malfeasance in office," according to the DOE Organization Act.
The US Supreme Court upheld removal protections for independent agency heads in the 1935 decision Humphrey's Executor v. United States. That standard was chipped away in Seila Law v. Consumer Financial Protection Bureau in 2020, but the court upheld removal protections for commissioners at independent multi-member agencies.
"To the extent Humphrey's Executor requires otherwise, the Department intends to urge the Supreme Court to overrule that decision, which prevents the President from adequately supervising principal officers in the executive branch," Harris said.
The DOJ did not respond to a request for comment on whether the new standard would apply to FERC.
Some energy attorneys said that lowering the bar for removing FERC members could have a "de-stabilizing" impact on the US energy sector, which has long enjoyed relatively consistent regulations from the independent body.
If FERC were to turn over policy decisions every election cycle, it could add significant risks to investments and discourage them altogether, several long-time energy policy experts told S&P Global Commodity Insights. That is coming at a time when infrastructure investments, which can take decades to turn a profit, are necessary to meet demand in the power and gas sectors, the experts said.
Bill Scherman, former FERC general counsel and partner at law firm Vinson & Elkins, said that while removing FERC's independence could lead to more "direct" policy changes, the commission already exists as a somewhat political entity.
Currently, "whoever is president at the time is going to be able to appoint a majority of the commission that [the president] believes share the same policy issues as the administration," Scherman said. "So, I don't think it's really going to materially change the day-to-day functioning of the commission."
Conservative legal scholars at the Federalist Society have argued removal authority is central to presidential powers to carry out executive policies.
