The Federal Energy Regulatory Commission (FERC) has taken a significant step toward regulatory reform by issuing a direct final rule that inserts conditional sunset dates into 53 specific regulations. Published in the Federal Register on October 21, 2025, this rule responds to Executive Order 14270, "Zero-Based Regulatory Budgeting to Unleash American Energy," issued by President Trump. Effective December 5, 2025, unless withdrawn due to significant adverse comments received by November 20, 2025, the rule establishes a one-year sunset period for these regulations, after which FERC will consider them ineffective and remove them from the Code of Federal Regulations. This development underscores ongoing efforts to streamline federal energy regulations, potentially reducing compliance burdens for industry stakeholders while ensuring alignment with statutory mandates. The rule's significance lies in its potential to modernize FERC's regulatory framework, fostering innovation in the energy sector amid broader deregulation initiatives.
Background and Executive Order Context
Executive Order 14270, signed by President Trump and published in the Federal Register on April 9, 2025 (90 FR 15643), directs covered agencies, including FERC, to implement zero-based regulatory budgeting. This approach requires agencies to review and sunset regulations issued under specified statutes—the Federal Power Act (FPA) of 1935, the Natural Gas Act (NGA) of 1938, and the Powerplant and Industrial Fuel Use Act (PIFUA) of 1978—unless they are essential to statutory obligations or part of permitting regimes. The order exempts regulations necessary for reliable, safe, and economically efficient energy services, emphasizing the removal of outdated burdens to "unleash American energy."
FERC, an independent agency regulating interstate electricity, natural gas, and oil pipeline transmission, identified 53 regulations for sunsetting after a comprehensive review. These include rules that are obsolete due to industry changes like natural gas unbundling or the rise of Regional Transmission Organizations (RTOs). The rulemaking process follows the direct final rule procedure endorsed by the former Administrative Conference of the United States (ACUS Recommendation 95-4), allowing expedited adoption for non-controversial changes while permitting public challenge. Key players include FERC Chairman Willie L. Phillips and Commissioners, with input from the Office of the General Counsel, as noted in the rule's contacts (Richard Lehfeldt and Karin Herzfeld).
Relevant legal precedents include prior FERC deregulatory efforts under Executive Orders like 14192 ("Unleashing Prosperity Through Deregulation") and 14154 ("Unleashing American Energy"), both attributed to President Trump. Politically, this aligns with Republican-led pushes for energy independence, contrasting with Democratic concerns over potential regulatory gaps in environmental protections. The rule explicitly states it does not alter FERC's core mission under the FPA and NGA to ensure just and reasonable rates.
Key Regulations Targeted for Sunset
The rule categorizes sunsetting regulations into those directly covered by E.O. 14270 and additional "housekeeping" items identified as unused or duplicative. For instance, 18 CFR 2.15, which specifies a method for calculating return on equity in hydroelectric amortization reserves, is deemed obsolete as it duplicates modern accounting practices and is no longer applied. Similarly, 18 CFR 2.78, related to natural gas conservation pre-unbundling, is outdated following industry restructuring under Order No. 636 (1992).
Other notable examples include:
- 18 CFR 2.21 on Regional Transmission Groups, superseded by RTOs and Independent System Operators (ISOs) as established in Order No. 2000 (1999).
- 18 CFR 157.14(a)(11) and 156.5(a)(9), requiring gas supply data in certificate applications, irrelevant post-unbundling where pipelines no longer own gas supplies.
- Subpart K of 18 CFR 385 (Rules 1101-1117), governing petitions under the repealed Natural Gas Policy Act (NGPA) of 1978.
The rule also sunsets procedural redundancies, such as paper filing requirements in 18 CFR 157.6(a)(2) and forms of notice in 18 CFR 385.203(d), reflecting FERC's shift to electronic submissions via eLibrary. Evidence from the rule's supplementary information highlights that many of these provisions, like transition rules in 18 CFR 375.104 and 375.105 from the 1977 Department of Energy Organization Act, have outlived their purpose.
Implications and Perspectives
Short-term implications include reduced administrative burdens for regulated entities, such as utilities and pipelines, potentially lowering compliance costs and encouraging investment in energy infrastructure. For example, eliminating duplicative reporting in 18 CFR 157.218 could streamline annual filings. However, if adverse comments lead to withdrawals, affected regulations might persist, requiring further rulemaking.
Long-term, this could harmonize FERC's regulations with evolving market dynamics, like the growth of renewables and market-based rates, but it raises debates. Industry groups, such as the Interstate Natural Gas Association of America (INGAA), may view it positively as deregulation fosters competition, while environmental advocates might argue it weakens oversight, though the rule preserves permitting regimes. Legal scholars note parallels to the Reagan-era regulatory relief efforts, but critics highlight risks if essential rules are inadvertently sunset without extensions.
Different perspectives emerge: Proponents, aligned with President Trump's energy agenda, see it as vital for economic growth; skeptics, including some state regulators, worry about federal-state coordination under the FPA. The rule provides a comment period on costs and benefits, allowing extensions up to five years if justified.
Forward-Looking Conclusion
This rulemaking represents a targeted effort to prune FERC's regulatory thicket, potentially setting a precedent for broader reforms. Key takeaways include the sunset of 53 provisions by December 5, 2026, unless public input warrants extension, and FERC's commitment to ongoing reviews under related executive orders. Potential next steps involve monitoring comments, possible companion proposed rules for contested items, and future rulemakings to codify extensions or conforming changes. Ongoing debates may focus on balancing deregulation with reliability, with challenges including adapting to emerging technologies like smart grids. While no predictions are made, trajectories could involve judicial reviews if stakeholders contest sunsets, or legislative responses to refine zero-based budgeting in energy policy.