FERC expected to take modest approach to Trump's sunset order, observers say

The Federal Energy Regulatory Commission's compliance with a sweeping executive order directing the agency to sunset certain regulations will likely be more diluted than initially anticipated as the Trump administration's priorities change, industry observers told Platts, part of S&P Global Commodity Insights.

The April 9 executive order directed FERC to establish a tentative termination date for "covered regulations," which includes regulations promulgated under the Federal Power Act and the Natural Gas Act that are not related to permitting.

FERC would set this termination date in a so-called sunset rule, which has to go into effect no later than Sept. 30. This initial termination date would need to fall within one year of each sunset rule's effective date.

While initially seen as a dramatic shift that could inject regulatory uncertainty into the US energy sector, many policy observers expect FERC to take a more modest approach to compliance with the order as the administration's priorities have changed.

That's in part because the order was largely seen as a directive of Elon Musk, a former leader of the so-called Department of Government Efficiency, or DOGE, who wanted to reduce the size and scope of the federal government. Musk departed the Trump administration in May and has since publicly criticized the president on his social media platform.

"If you take a very broad interpretation and assume that they had to address all these rules at the same time ... it would disrupt FERC's ability to pursue its day-to-day mandates," said Rich Glick, former FERC chairman during the Biden administration. "It just doesn't seem feasible to pursue it that way, and I suspect that there are some people in the administration who probably recognize that."

The executive order also applies to other energy-related agencies across the federal government, such as the US Energy Department, US Nuclear Regulatory Commission, and US Interior Department agencies including the Bureau of Ocean Energy Management, Bureau of Land Management, Bureau of Safety and Environmental Enforcement, US Fish and Wildlife Service and Office of Surface Mining Reclamation and Enforcement.

Hard-to-touch rules

While the executive order was relatively sweeping, agency heads were given some discretion to exempt certain rules. The order applies to rules related to "energy production," which FERC does not explicitly regulate. That could give the chairman some leeway to exempt regulations.

"FERC has rules about open access transmission tariffs and what [utilities] have to include," said Ari Peskoe, director of the electricity law institute at Harvard University. "If you were to sunset those rules, then all transmission tariffs suddenly become unjust and unreasonable and unduly discriminatory."

FERC has rules governing everything from utility accounting procedures to how to participate in commission meetings. Those the commission likely will not touch.

"The only thing that I can imagine is if there's really a rule somewhere on FERC's books that is just a relic of an earlier era that's just no longer used, for example, transmission rules that somehow predate open access but were never wiped off the books, then you can just wipe them off the books," Peskoe said.

FERC could use the order as an opportunity to evaluate whether all the information it collects from regulated entities is still necessary, Glick said.

"There are probably regulations where people have to [submit] various information that's really not that relevant for the commission anymore," the former chairman said in an interview. "So, I suspect there are those regulations out there that you could streamline and that would certainly help regulated entities."

Other priorities

As written, the executive order would require extensive agency resources to ensure compliance with the Administrative Procedures Act, FERC observers told Platts in April.

The executive order also comes at a time when the Trump administration is trying to reduce the size of the federal workforce to rein in spending. In July, the US Supreme Court ruled that the White House could move forward with sweeping plans to reduce the federal workforce and restructure agencies.

While FERC has been spared by some of the steep layoffs faced by other agencies, a governmentwide hiring freeze has prevented the 1,500-person agency from replacing departing workers. Earlier this year, former Chairman Mark Christie said he expected the agency's workforce to be down about 9% by the end of the fiscal year, which comes Sept. 30.

FERC will probably focus on other administration priorities, such as colocation guidelines for data centers and approving natural gas permits rather than the legally intensive process of adding sunset provisions.

"This directive was very much a product of DOGE and Elon Musk, who obviously exited the stage prominently earlier this year," Zachary Schauf, partner at Jenner & Block, said at the Energy Bar Association's Energy Forum on Sept. 15.

"If I were sitting in an agency and I was looking at a shrunken workforce, and also a lot of stuff that I wanted to do ... going through and making efforts to put a sunset provision, which is going to unleash [legal] challenges on all of my regulations, would not be super high on my list of priorities."

However, some observers said that compliance with the order could come down to what the White House and the Office of Information and Regulatory Affairs want to get rid of. The president signed an executive order in February that required independent agencies, like FERC, to submit major rules in draft and final form for White House approval. That means that FERC might need to get explicit White House approval of the agency's compliance plan.

When asked about the sunset order at the commission's Sept. 18 open meeting, FERC Chairman David Rosner told reporters that the agency was working on a compliance plan and would provide more updates at a later date.