What’s on the Horizon for FERC After the Sunset?

For companies subject to regulatory oversight of the Federal Energy Regulatory Commission (FERC), tomorrow could mark the beginning of a critical chapter in the agency’s history. On September 30, 2025, FERC and nine other agencies—including the U.S. Department of Energy, Environmental Protection Agency, and Nuclear Regulatory Commission—are each required to issue a rule that would sunset regulations stemming from various foundational statutes underpinning long-standing procedures and practices. In the case of FERC, the Federal Power Act of 1935 and the Natural Gas Act of 1938 are among the named statutes. 

Zero-Based Regulation Executive Order

The origin of this directive is an Executive Order (EO) that President Trump issued on April 9, 2025, “Zero-Based Regulatory Budgeting to Unleash American Energy.”  The EO states that FERC and other covered agencies must:

• Conditionally sunset all regulations subject to the order after one-year (September 30, 2026), provided that the agency may extend a regulation for up to five years following public comment opportunity on the costs and benefits of the regulation.
• Apply the same five-year limit to new regulations covered in the EO, with the same required public comment opportunity.

Agencies are authorized to extend the sunset date in subsequent five-year increments in their discretion for as many times as they elect, following the public comment process outlined in the EO.  The EO exempts from the directives: (1) regulatory permitting regimes authorized by statute, and (2) new regulations or amendments that the Director of the Office of Management and Budget determines would have a net deregulatory effect.

FERC’s Implementation of the EO

FERC’s approach to the scope of a proposed rule in response to the EO will be closely watched.  The EO’s general directives appear to encompass landmark orders (e.g., Orders 888, 890, 1000, 2000) that led to the development of transmission planning regimes, wholesale power markets, and other programs that have catalyzed billions of dollars in investments. 

However, FERC must decide whether some of these rules should be exempted from sunsetting on the basis that they are “regulatory permitting regimes.”  The EO also provides that FERC can extend regulations for up to five years after considering public comments on the costs and benefits of a regulation. These “carve-outs” set up the potential for a narrower proposed rule, providing a pathway for FERC action that largely keeps long-standing structures in place. 

FERC is also confronted with the challenge of aligning the EO with requirements under the Administrative Procedure Act (APA).  The APA requires agencies to provide full notice and opportunity to comment on proposed revisions to federal regulations. The EO, on the other hand, requires public comment opportunity on the more limited element of the “costs and benefits of each regulation.”  To align the proposed rule with this language under the EO, at minimum, FERC would likely need to harmonize that provision with the “just and reasonable” language governing its rate review.  FERC would also need to determine whether it needs to issue each proposed rule change individually—a colossal administrative effort—or whether the APA allows for an aggregated approach. 

What’s Next?

The EO puts FERC and the other named agencies in uncharted territory.  It is a regulatory “Y2K” event, marked with uncertainty around whether a coming change will fundamentally disrupt existing systems or whether concerns are, in the end, unfounded. 

What the horizon looks like after the sunset may not be clear for some time, although the scope of FERC’s initial proposal will preview the potential impact.  Even a more narrowly scoped proposal to sunset FERC’s regulations could have a substantial impact on regulated companies given the major rules at issue. The record developed in response to FERC’s proposed rule, through the APA’s notice and comment opportunity, will likely be critical in shaping the outcome of a final rule.  That record may also weigh heavily in any appellate review.  Whether September 30, 2025 marks the beginning of a watershed moment for the agency may rest on the active involvement of states, grid operators, companies, and other organizations whose diverse range of viewpoints have shaped the energy regulatory structure that is the vehicle for developing new infrastructure and powering our homes and businesses. 

For more information on FERC’s proposal and how that may impact your business, please contact the author of this alert or the Womble Bond Dickinson attorney with whom you normally work.